The U.S. Securities and Exchange Commission (SEC) Defends Cryptocurrency Oversight in Court Against Binance, where Binance, the world's largest crypto exchange, urged a federal judge to dismiss the SEC's case against them.
This courtroom battle is the second in a week, following a similar clash between Coinbase and the SEC over jurisdiction questions. Binance, facing allegations of rule-breaking and fraud, has asked U.S. Judge Amy Berman Jackson to dismiss the lawsuit. Despite Binance's recent $4.3 billion settlement with the Department of Justice, the SEC's case still looms over the exchange.
The SEC accuses Binance, its former CEO Changpeng Zhao, and the U.S. arm of artificially inflating trading volumes, diverting customer funds, and misleading investors. The regulator also claims Binance unlawfully facilitated trading of crypto tokens deemed unregistered securities.
Central to the SEC's case is whether crypto assets on Binance's platform qualify as securities under its oversight. Binance's lawyer, Matthew Gregory, argued that the SEC is sending conflicting messages to the crypto industry—encouraging registration while impeding viable paths to compliance.
The legal battle revolves around the definition of "security" under the Securities Act of 1933. The judge probed both sides on their views, emphasizing the flexibility of the test and questioning how Binance reconciles its call for new crypto regulation with existing case law.
The so-called "major questions doctrine" raised by Binance, suggesting federal agencies need specific congressional authorization for regulation, faced skepticism from the judge. This principle, based on a Supreme Court ruling, was also discussed in the recent Coinbase hearing.
The rulings in both cases could influence the SEC's jurisdiction in the crypto sector. The regulator, under Chair Gary Gensler, has expanded its focus beyond token-selling companies to include trading platforms and broker-dealers. These legal battles highlight the industry's concerns about the SEC's perceived overreach and uncertainty over jurisdiction boundaries.
Judge Jackson's questioning during the hearing echoed the sector's uncertainty, pressing the SEC on where its jurisdiction over digital assets begins and ends. The outcomes of these cases will likely impact the regulatory landscape for digital assets in the United States.
Reference: https://www.channelnewsasia.com/business/binance-sec-face-over-regulators-crypto-oversight-4065681
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