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Binance, Binance.US, and Changpeng Zhao’s lawyers have filed an appeal on September 21st to challenge the lawsuit brought by the U.S. Securities and Exchange Commission (SEC). They argue that the regulator cannot reasonably defend the various securities violations it has alleged and that it is attempting to regulate cryptocurrencies without clear authority from the U.S. Congress.
SEC’s Defense of Investment Contract Term as “Too Broad”
In June, the SEC sued Binance, Zhao, and Binance.US, alleging that they illegally listed various cryptocurrencies as unregistered securities for trading and investment by U.S. investors. The lawsuit quickly turned into a legal battle over who has access to customer funds at Binance.US. Lawyers for Binance and Binance.US argued in their appeal on September 21st that the regulator has gone too far and violated securities laws.
The submitted court documents stated, “The SEC has recently taken various enforcement actions based on its new position that nearly all cryptocurrencies and nearly all cryptocurrency transactions are securities” including this action. One of the documents also highlighted that the SEC’s interpretation of the investment contract term is too broad.
“SEC Acted Without Authorization from the U.S. Congress”
In the appeal, similar arguments were made regarding the doctrine of important questions, which states that federal agencies should wait for authorization from the U.S. Congress on significant economic or political matters:
Indeed, since 2019, the U.S. Congress has considered over a dozen proposals that would provide a consistent and workable framework for cryptocurrencies and trading platforms. Crucially, none of these proposals grant the SEC sole regulatory authority over the cryptocurrency industry. Nevertheless, the SEC is attempting to expand its jurisdiction and has filed claims against Binance Holdings Limited (‘BHL’) and Changpeng Zhao, among others.
While some judges have determined that the U.S. Congress needs to clarify its regulatory approach to cryptocurrencies, others have deemed it less significant to meet the doctrine of the cryptocurrency industry.
Furthermore, the U.S. House Financial Services Committee has presented several bills specific to the cryptocurrency industry for a vote in the House. The passage of these bills through the U.S. Senate remains uncertain.
