Not yet free? Binance, CZ fires back at SEC over inclusion of DOJ guilty plea in ongoing case

December 14, 2023 01:06 AM AEDT | By Invezz

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Not yet free? Binance, CZ fires back at SEC over inclusion of DOJ guilty plea in ongoing case — Image source: Invezz

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Binance and its US subsidiary have filed to dismiss an SEC request to include its guilty admission in the Department of Justice proceeding to its own case. The SEC had argued that accepting culpability demonstrates that Binance was aware of its US operations, including its illegal offerings to its American customers. SEC asserted:

Zhao’s and Binance’s plea agreements and the Consent Order provide further grounds for this Court to deny the Joint Motion to Dismiss.

Binance responded that the SEC’s move is an attempt to bring new information and arguments. The embattled exchange says the regulator’s notice does not substantiate its claims for the case that dates back to June 2023.

In the December 12 filing that includes responses of the former CEO Changpeng Zhao, Binance says the SEC’s request is procedurally wrong. SEC’s filing fails to meet the “Howey Test” by not showing that the US customers had any contracts that satisfy the thresholds of an “investment contract”.

Binance further states that the SEC’s attempt to use the resolutions in the DOJ settlement shows a lack of information on its regulatory authority. The exchange fired back at the regulator, pointing out that security laws do not operate like the Bank Secrecy Act for which Binance and Zhao were accused in the DOJ case.

Unregistered securities offering

SEC filed a lawsuit against Binance on June 5 in the US District Court of Columbia, alleging unregistered securities offering on the exchange.
In the lawsuit, the regulator pressed 13 accusations against Binance, including illegal sales and offers of its native tokens BNB and Binance USD (BUSD). The regulator also touched on Binance’s staking program, the BNB Vault, and Simple Earn products.

Additionally, the SEC accused Binance of failing to register its platform, Binance.com, as a broker-dealer clearing agency or exchange. Zhao, the then Binance CEO, and top executives were accused of enriching themselves while putting billions of investors’ assets at risk. SEC says Binance and Zhao also misled investors about the exchange’s corrupted trading volumes and risk controls.

Following the latest engagements, it remains to be seen what recourse the court will take as Binance troubles mount. Recently, Binance agreed to pay $4.3 billion to settle a similar case with the DOJ, while its CEO Zhao resigned.

The post Not yet free? Binance, CZ fires back at SEC over inclusion of DOJ guilty plea in ongoing case appeared first on Invezz

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