The latest attempt from Binance to convince a US court to dismiss its ongoing case with the SEC taps into a recent ruling in favor of Ripple.
Binance and its related entities, sued by the United States Securities and Exchange Commission (SEC), have filed a motion to dismiss charges brought against them by the regulatory body.
Notably, the latest motion seeks to leverage a recent court ruling in Ripple’s favor, which found that secondary market XRP sales did not constitute securities transactions.
The reference to Ripple’s court ruling comes within a section where Binance, in its defense, argues that the SEC’s reliance on past initial coin offerings (ICOs) cases is misplaced.
Binance points out several cases in which courts left open the possibility that tokens sold by investors did not constitute securities transactions. The exchange referenced SEC lawsuits against projects such as Telegram, Kin, Terra, and LBRY.
However, Binance particularly references Ripple’s case handled by Judge Torres as the “only court to address transactions analogous to those that allegedly occurred on [the Binance US platform].”
Binance then alluded to the court finding that secondary market XRP sales (blind bid/ask transactions) were not investment contracts. Given such a ruling, Binance claims that crypto trading on its platform could not be classified by the SEC as securities transactions.
A section of Binance’s memorandum of law in motion to dismiss reads, “The undisputed facts [in the Ripple case] showed no relevant relationship between the parties to the sale that could transform the sale of a digital asset into the sale of an investment contract.”
Binance Claims SEC Has No Right to Regulate Crypto
Beyond tapping into Ripple’s win, Binance also strongly argues that the SEC’s lawsuit represents an overreach. The filing quotes comments from SEC Chairman Gary Gensler in May 2021, in which he conceded that the crypto scene did not have a regulatory framework for the SEC or the CFTC to properly oversee the industry.
“Since the SEC Chair’s concession, Congress has not adopted new legislation to expand the SEC’s authority in the digital asset space,” Binance claims.
The filing also notes that the SEC is trying to “achieve by litigation what it lacks by legislation,” thus going beyond the regulatory powers Congress has granted it.
It remains to be seen whether the court applies Ripple’s court ruling, which the SEC has already appealed to Binance’s ongoing lawsuit. However, the latest development underlines the role of precedent in the legislative field and how Ripple’s win could potentially be leveraged to provide further regulatory clarity to the US cryptocurrency industry.
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