Top crypto exchange Binance has made a big move in the SEC lawsuit. In a court filing on Thursday, Binance and its Chief Executive Officer Changpeng "CZ" Zhao moved to dismiss the lawsuit against them by the U.S. Securities and Exchange Commission (SEC).
In a 60-page petition, Binance and Zhao argued that the regulator overstepped its powers by suing them.
The SEC sued Binance in June, alleging a variety of violations, including mishandling customer funds, deceiving investors and regulators, and violating securities laws.
Binance accuses the regulator of attempting to impose fines retroactively before it issued any public guidance on cryptocurrency in its motion to dismiss.
Binance.US, previously known as BAM Trading Services, also requested that the charges against it be dropped in a separate 56-page petition.
Crypto community reacts
Bill Morgan, an XRP enthusiast and legal expert, notes a section from Binance's brief arguing against the SEC's attempt to bring all sales of tokens classified as securities within its jurisdiction, including when sold on exchanges as blind bid or ask transactions.
Morgan believes this is one of the reasons the SEC is pursuing an interlocutory appeal of Judge Torres' decision in the Ripple case.
A passage in the Binance motion reads: "In other words, the SEC improperly claims that its regulatory jurisdiction sweeps in underlying assets themselves (like the oranges in Howey), even when those assets are stripped of any potentially relevant features of an 'investment contract' and sold on exchanges in blind bid or ask transactions."
Morgan claims that the SEC anticipated that Binance and the other defendants in SEC v. Binance and other cases would utilize this argument because other exchanges and sellers use blind or bid sales.
The XRP enthusiast drew attention to an extract referring to the Ripple case. Binance US or BAM defendants are attempting to rely on Judge Torres' decision on blind or bid-type transactions on secondary exchanges.