Binance's efforts to dismiss a U.S. Securities and Exchange Commission (SEC) lawsuit do not have a basis in the law, the federal regulator said in a filing Wednesday.
The State of crypto is presented by Tron connecting the world to the power of Cryptocurrency. The US Securities and Exchange Commission is firing back at B's efforts to dismiss a lawsuit from the federal regulator. Joining us now to discuss this coin global policy and regulation. Managing editor Nick Day who is fresh from his incredible uh uh Twitter Space X Space is what I don't even know what it's called, but it was this big event last night at a place called Pub Key in the Village, fascinating discussion about uh journalism and the Saman free Trial. He is also the editor of going to State of Crypto newsletter where you'd find everything like this. Um It, it makes a great holiday gift if you don't know. And it's free. People don't know that they think it's worth hundreds of thousands of dollars each year, but it's free. Good morning, Nick. Good morning. Uh So before we get into uh this uh latest filing thing, uh let's go back here. Um And let's start over because, you know, so much time has passed what it would be, you know, FTXSPF trial. Talk about a little how this whole Binance thing came about. Yeah. So, you know, recall that back in, uh, I wouldn't say it was June. Uh, it feels like a million years ago but it was actually just this past summer, the SEC filed a number of lawsuits against finance the world's largest crypto exchange as well as claiming the US largest crypto exchange. Uh, basically alleging that, you know, both these companies were offering unregistered securities to customers, to the investing public, uh, as well as a couple of other things for B but, uh, you know, both of the lawsuits arguments were, you know, a lot of these cryptocurrencies that are trading are unregistered securities. Coin based finance and Binance us are allowing people to access these unregistered securities without any of the disclosures or any of those details that might be important. Uh And therefore they're violating federal securities law. So very straightforward, you know, on the face of it, at least as far as the allegations are concerned. All right. And now what did the SEC say in the filing? Nick? Yeah. So this is, uh, you know, obviously the companies finance and Binance US filed to dismiss the lawsuit. Uh, basically saying I'm making a number of arguments ranging from, you know, they don't believe that the SEC has quote plausibly alleged that they are listing unregistered securities, uh, as well as arguing a little bit on the major questions doctrine, which is a Supreme Court ruling saying that federal agencies uh basically can't overstep their bounds without congressional approval. The SEC is saying that these arguments are, uh, in its words, distorted and tortured, basically saying that, uh, you know, it does not agree that it has not plausibly alleged that there are securities listed on Binance. Uh, the S DC claims that, you know, it went to the detail and it opened with a quote from a B uh executive who said at some point that they are operating a unregistered securities exchange. Um But actually, I gotta say a very kind of uh literary type of filing compared to what I usually see from the, from federal regulators. Uh There was a lot of, you know, kind of, uh you know, little narrative details that um were clearly meant to be more of a, you know, almost a storytelling vibe. Um not here nor there, but just an interesting aside. Um But yeah, no, the SEC is, give examples. Well, it started with, uh you know, that um there was a whole part where they were saying that, you know, B and CZ uh the founder uh had, you know, created this entire plan to try and avoid us regulators and that follow up. But, well, here we are, you know, just these little details that are like, again, not something you normally see in a federal filing of this nature. They literally said, here we are, yeah, yeah, quite literally literally said here we are here, we are, there might not have been a comma, but yes, it's, um, you know, the, the little touches that, you know, are, I guess, designed more for like the general audience necessarily as opposed to a judge. Um, you know, the whole thing here, by the way, it's worth noting that a lot of times these functions to dismiss are kind of like a formulaic thing. The companies have to do them, the agencies have to push back on them. I, I don't think anyone's really expecting a motion to dismiss uh to succeed here. I think everyone's expecting that. Yes, it's gonna go at least a little bit further into the legal process. Um Probably, you know, maybe even as far as a trial, but, you know, certainly this is pretty early in the process for everything that, for anything to happen. So, um it is worth just remembering that this is, you know, probably a little bit procedural at this point, but, well, here we are. But what does it mean in the uh going forward? I mean, for, for some people who might not understand the significance of this uh of this conflict here, of this lawsuit. Uh What, what could it possibly mean for b uh if the SEC succeeds, what's at stake if the SEC succeeds in, you know, quashing the current motion to dismiss uh what it really means is that the lawsuit will continue the, you know, BB US NCZ will continue to face these sec allegations. Uh, probably, it means the, you know, case is gonna proceed a little bit through, you know, more of the procedural things. We're gonna see more motions, more filings. Um, I it's probably a bit too early to say for sure whether or not we're gonna get to an actual trial. Uh, that's gonna, you know, one thing you gotta remember if these sec cases, uh, aren't settled, they could go on for years, you know, r bull being the probably the, you know, big example that case began in December of 2020. It did not, you know, uh it's still not concluded, but we didn't get a first major ruling on it until uh July 2023. So that's a, you know, good number of years, 2.5 years before we got any, you know, kind of anywhere with it. Um And this is, I would argue a somewhat more complex case, right? You're looking at more tokens more uh you know, a bigger platform ripple. The allegation was about one specific token that was uh you know, DS C alleged uh was, you know, being issued by one specific company here. You have, you know, I'd say a few more layers of complexity. So, uh right now, I'd say nothing is really at stake to get back to the actual question. But obviously, the, you know, overall question of whether or not crypto exchanges as they currently exist in the us continue to operate and you know, operate the way they do. Uh Is the overhanging question about what's at stake? But again, we're not gonna get a, you know, quick or easy answer. I would say to any of those at this point in time. All right, Nick, thanks for that update. We'll see you tomorrow. Sound good. That was Coindesk global policy and regulation managing editor Nick Day and don't forget to sign up for the state of crypto newsletter on Coindesk dot com.