January 19, 2024 – 7:43 AM PST
(Reuters) – Binance is due to square off against the U.S. Securities and Exchange Commission in a Washington courtroom next week, in another high-profile hearing involving the agency and a crypto exchange that could define how cryptocurrencies are regulated.
The world’s largest crypto exchange has asked a federal judge to toss a lawsuit the SEC filed against it in June and is expected to make its case for dismissal to Judge Amy Berman Jackson on Monday.
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.
Binance was also accused of facilitating trading of several crypto tokens the SEC deemed securities.
The hearing had originally been slated for Friday at 10:00 AM ET (1500 GMT) but was postponed due to snow in the Washington DC area, the court said in a notice. It has been rescheduled for Monday, Jan. 22 at 10 a.m. ET, the notice said.
The hearing will follow the SEC’s case against rival U.S. exchange Coinbase, which was also accused by the SEC of trading cryptocurrencies that should have been registered. Both cases are expected to help define the SEC’s authority over the cryptocurrency sector. The SEC has long argued most crypto tokens are akin to securities subject to its oversight, while the crypto sector largely disputes the SEC’s stance.
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 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 and Sharon Singleton