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SEC vs. Binance Lawsuit: Exchange Secures Extra Time to Respond to Court Demands

Published September 27, 2023 2:34 PM
Teuta Franjkovic
Published September 27, 2023 2:34 PM

Key Takeaways

  • BAM Trading and BAM Management, the two Binance-owned entities, requested an extension to respond to court orders.
  • The judge granted the extension.
  • The new deadline for their response is September 27, 2023.

The cryptocurrency exchange Binance Holdings Limited, its creator Changpeng Zhao, and two US-based Binance companies, BAM Trading Services Inc. and BAM Management U.S.

The SEC filed a lawsuit in August, naming Holdings Inc. and others as defendants. In the lawsuit, the SEC alleges that these companies offered securities backed by digital assets without the required registration.

Binance has  until September 26 to reply to court orders in the continuing case launched by the Securities and Exchange Commission (SEC).

BAM Motion

Judge Zia M. Faruqui of the U.S. District Court for the District of Columbia granted an application for an extension of time to reply to two prior court orders. BAM Trading and BAM Management submitted the motion.

In the first order, defendants were told to justify the sealing of certain documents relevant to the SEC’s move to compel discovery or have portions of them redacted, and in the second, defendants were told to do the same.

The deadline for responding to the orders to show cause for BAM Trading and BAM Management is currently September 27. The SEC did not object to their request for a deadline extension.

Another request to delay the case’s status conference on October 12 from BAM Trading and BAM Management received no opposition. The only defendants asking for more time to answer are the two businesses. All defendants are still parties to the SEC complaint, which is still pending. The expansion covers only the two BAM entities that Binance owns.

Binance Seeks Dismissal, Claiming SEC Lawsuit Was ‘A Year Too Late’

In an August lawsuit , the SEC accused Binance of offering cryptocurrencies that should have been registered as securities. This includes tokens like Binance Coin (BNB), Binance USD (BUSD), and several other third-party tokens traded on the Binance platform, as mentioned in the complaint.

Binance contended in the dismissal motion  that cryptocurrency tokens were not securities and therefore not subject to SEC regulation. According to Binance, the tokens do not pass the requirements set forth by law for a “investment contract” to qualify as a security. A contract between the token issuers and buyers and an investment into a shared business as needed by precedent, according to Binance, do not exist.

Additionally, the motion argued  that the SEC lacked apparent congressional authority to regulate cryptocurrencies in this way and that this was a “major question” that belonged in the hands of lawmakers rather than the courts.

Binance asserted that the SEC’s claim relating to Binance’s 2017 initial BNB offering has passed the statute of limitations.

The SEC’s attempt to enforce securities laws against Binance’s non-U.S. exchange and the BNB offering, according to the request, is illegally extraterritorial.

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