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The
world's largest crypto exchange will urge a federal judge to
toss a lawsuit the SEC filed against it in June. The regulator
accused Binance, its CEO and founder Changpeng Zhao and
Binance.US's operator of artificially inflating its trading
volumes, diverting customer funds, failing to restrict U.S.
customers from its platform and misleading investors about its
market surveillance controls. Binance was also accused of
facilitating trading of several crypto tokens the SEC deemed
securities.
Wednesday's hearing comes two days after a similar hearing in
the SEC's case against U.S. exchange Coinbase, although Coinbase
was accused of operating as an unregistered securities exchange
and does not face any fraud charges.
BAM Trading, the operator of Binance.US, has already said in
court filings that the SEC has not made its case that Binance
committed fraud.
Binance has also said the SEC does not have the authority to
oversee crypto assets, an argument similar to one laid out on
Wednesday by lawyers for rival Coinbase, which is also seeking
dismissal of the case against it.
Binance Holdings last year agreed to pay $4.3 billion to settle
with the U.S. Department of Justice and Commodity Futures
Trading Commission, and Zhao pleaded guilty to breaking U.S.
laws designed to prevent money laundering.
But the SEC's case, which is aimed at Binance's core business
model, is still hanging over the firm. It is also one of a slew
of cases the regulator has brought against crypto firms in
recent years.
The SEC focused initially on companies selling digital tokens,
but under the leadership of chair Gary Gensler has shifted to
firms offering trading platforms and clearing activity, and
acting as broker-dealers.
Crypto companies deny that most tokens meet the SEC's definition
of a security and say legislation is needed to regulate the
industry.
(Reporting by Chris Prentice and Jody Godoy in New York and
Hannah Lang in Washington; Editing by Daniel Wallis)
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