Yesterday, Binance and its founder, Changpeng Zhao, submitted a Joint Notice of Supplemental Authority to the United States Securities and Exchange Commission (SEC) to help strengthen its legal defence.
The filing leverages Coinbase’s recent partial victory in its case against the SEC to help argue that Binance should be off the hook on all charges.
Binance was accused by the SEC of operating as an unregistered exchange, broker-dealer, and clearing agency, but the exchange itself claimed that the SEC hadn’t brought forward any sufficient evidence to meet its burden of proof under the law.
Binance’s filing pointed out the problem it saw in the SEC’s mentor with regard to how securities laws apply to digital assets. It said that the agency’s understanding is rather outdated and not fit for the rapidly changing nature of the crypto industry.
In addition, Binance disagrees with the SEC’s move to apply old frameworks in attempts to regulate digital currencies. Binance’s legal team has also pointed out that the SEC did not issue a deficiency order against Coinbase, which they say is proof of the arbitrary nature of the enforcement practices of the agency.
The filing was a bit similar to the Coinbase case, where the question of the SEC’s jurisdiction over crypto exchanges through existing securities laws was challenged. In Coinbase, the 3rd Circuit Court of Appeals has ruled that the SEC must explain why it is not considering the rulemaking petition filed by Coinbase.
Binance argues that this decision demonstrates the absence of clear regulatory guidance for digital asset exchanges and further justifies its own action against the SEC.
Binance’s defence also criticizes the SEC’s application of the Howey test which is a legal framework used to determine whether something is a security. The exchange argues that the SEC should not apply this test to digital assets without clear rules and guidance. Binance wants to dismiss claims about the SEC’s request for disgorgement and its position on third-party tokens.
Also Read: SEC Files Opening Brief in Ripple’s Ongoing XRP Appeal
