US SEC Fights Back, Says Binance Wants to ‘Dismantle Decades’ of Legal Precedents

The United States Securities and Exchange Commission (SEC) has responded to a motion-to-dismiss order filed by Binance in the ongoing legal tussle.

The U.S. SEC has urged a federal judge to deny Binance’s motion to dismiss the lawsuit. The company filed the motion in September seeking to withdraw the regulatory agency’s case against its business.

In its response dated November 7, the SEC strongly argued that Binance is seeking to avoid the consequences of its actions.

The SEC’s rebuttal begins by recounting a wild comment made by Binance’s former chief compliance officer. In a notorious message shared within the Binance team but obtained by the SEC as part of its investigations, the Binance official acknowledged that the company was operating an “unlicensed securities exchange” in the United States.

As per the SEC, the implicating comment succinctly sums up the case, even though Binance now argues that its operations in the United States did not violate securities law.

The SEC also mentions that Binance’s motion to dismiss the lawsuit lacks merit in convincing the court to “dismantle decades of foundational precedent” upon which the country has built its securities law.

In place of such time-tested principles, SEC lawyers claim that Binance wants to introduce a “rigid framework” that has not been accepted by any U.S. court. The SEC mentions that, in contrast, many courts have rejected such a notion.

Binance Seeks to “Invade Accountability” by Changing the Law, SEC Says

Continuing in its argument, the SEC alleged that Binance’s motion to dismiss was the latest bid by the company to “invade accountability.”

As part of such an effort, the SEC argues that Binance wants to insert new requirements into the famous “Howey Test,” which the agency has used to bring enforcement against companies for several decades.

The SEC claims that Binance’s proposition violates the contractual principles of the Howey Test. For instance, the filing mentions Binance’s claim that an asset or offering that constitutes a security must include a “forward-looking contract” and that investments must flow “into the relevant common enterprise.”

However, the SEC says the argument does not hold water, as it seeks to turn decades of established precedents into “matters of contract law.” SEC lawyers further note that Binance’s arguments lack support in the law and are backed by distorted readings of the law and previous cases by the U.S. securities regulator.

Meanwhile, the SEC dispelled Binance’s argument that the ongoing lawsuit raises the “Major Questions Doctrine” and that the regulator has no Congressional right to regulate the cryptocurrency industry. The regulatory body classified such claims as part of Binance’s “theatrics” to justify its securities law violation.

The court will now review the SEC’s latest filing while deciding whether to accept Binance’s earlier request to dismiss the case. A decision in the regulator’s favor will be crucial to the SEC, as it would prove that it has sufficient claims for its litigation against Binance.