How Binance is Fighting Back Against SEC Accusations?

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Binance, the world’s largest cryptocurrency exchange, and its US affiliate are currently under investigation in the United States for various alleged crimes, such as aiding money laundering and committing tax offenses. Recent findings have come to light indicating that a senior executive at binance

binance

[email protected]

Centralised Exchange

, closely linked to changpeng zhao

changpeng zhao
founder and ceo at Binance
Changpeng Zhao is the Founder and Chief Executive Officer at Binance.His contribution to the enhancement of Binance made the platform world’s largest cryptocurrency exchange since its inception in 2017. Zhao launched the blockchain network Binance Smart Chain which has made a remarkable contribution to the development of the decentralized finance ecosystem. Whereas in 2019, he launched Binance’s US affiliate, Binance.US.
He is commonly known as CZ, a Chinese-Canadian Business Executive who has been ranked 113th richest in the globe as of 2022. In the past, he founded Fusion Systems, a trading system for brokers famous for some of the fastest high-frequency trading systems for brokers. Zhao has served as a member of the team that developed Blockchain.info and played the role of Chief Technology Officer of OKCoin, a secure cryptocurrency exchange platform for Bitcoin, Ethereum, Dogecoin, and other crypto assets.

EntrepreneurInvestorChief Executive Officer

(also known as CZ), managed five bank accounts on behalf of the exchange’s independent branch in the US.

However, it seems like Binance has a plan of action to fight back against these allegations. Read on for more details.

SEC’s Charges Against Binance 

The Securities and Exchange Commission (SEC) has brought forth a total of 13 charges against Binance, each pertaining to different alleged misconduct. According to the SEC, Binance has been accused of disregarding federal securities laws, which are designed to safeguard investors and maintain the market’s integrity. These charges imply that Binance’s actions have jeopardized investors’ funds while benefiting the exchange financially.

At the core of the SEC’s case is the assertion that Binance provided “unregistered securities” to investors in the United States, thereby violating U.S. securities laws. This argument revolves around the SEC’s broad interpretation of what qualifies as a “security.”

Also Read: Binance.US Responds to SEC Lawsuit, Urges Congressional Action for Regulatory Clarity

What potential defense could Binance present in response to the allegations?

Binance could mount a defense by asserting that the cryptocurrencies they offer do not meet the criteria to be classified as securities according to the Howey Test, which is used by the U.S. Supreme Court to determine if certain transactions qualify as “investment contracts.” By establishing that their assets are not securities, Binance would argue that they are not subject to the SEC’s jurisdiction.

Regarding the charges of conducting unregistered offers and sales of crypto asset securities, such as “BNB” and “BUSD,” Binance might argue that these assets do not meet the legal definition of securities in the United States, and therefore, registration is not required.

Furthermore, the SEC alleges that Binance employed strategies to evade U.S. regulatory oversight, including making misleading public statements about their services to U.S. customers and engaging in covert activities to sustain valuable U.S. accounts. In response, Binance might assert that they were operating within a gray area due to the absence of clear guidance from U.S. regulators.

Overall, Binance’s defense would likely revolve around challenging the classification of their assets as securities, emphasizing compliance with existing regulations, and addressing the ambiguity surrounding U.S. regulatory expectations in the cryptocurrency space.

To Conclude, 

After XRP and Coinbase, it appears like Binance has come under the scrutiny of the SEC. Although the SEC’s mandate is to safeguard investors, ensure fair, orderly, and efficient markets, and promote capital formation, its current strategy can be in conflict with this goal. The absence of regulatory certainty in the U.S. for the cryptocurrency industry is a crucial factor to take into account while analyzing the SEC’s accusations against Binance.