Binance, a major player in the cryptocurrency exchange market, recently submitted a filing to the U.S. District Court for the District of Columbia. This move came in response to the Securities and Exchange Commission’s (SEC) efforts to leverage Binance’s $4.3 billion settlement with the U.S. Department of Justice (DOJ) and the Financial Crimes Enforcement Network (FinCEN) in their ongoing legal battle against the crypto exchange.
In the settlement reached on November 21, Binance and its former CEO, Changpeng Zhao, acknowledged certain violations, but the firm is now arguing that these admissions are not relevant to the SEC’s case. The SEC, which was not a party to the DOJ and FinCEN agreement, has sued Binance and Zhao, accusing them of mishandling customer funds, misleading investors and regulators, and violating securities laws.
The recent filing by Binance and Zhao challenged the SEC’s attempt to introduce new factual information and arguments through a “Notice of Supplemental Authority.” They argued that this move was procedurally improper and failed to establish a connection between the DOJ and FinCEN resolutions and the SEC’s claims.
Binance’s legal team contended that the SEC’s approach was misguided, especially in its attempt to use the resolutions to defeat Binance’s fair-notice argument. They maintained that the SEC’s effort to conflate different statutory schemes is unavailing and that the SEC’s claims do not apply extraterritorially to Binance or Zhao.
Binance’s filing also addressed the territorial reach of U.S. securities laws, arguing that jurisdictional admissions under the Bank Secrecy Act (BSA) do not extend the SEC’s claims to foreign defendants like Binance. They emphasized that the SEC’s reliance on factual admissions concerning U.S. customers misunderstands the focus of these laws. Binance further argues that the applicability of the BSA to the company and Zhao is irrelevant, as the statute has a different focus than securities laws and extended its reach to foreign businesses and conduct.
The SEC’s lawsuit against Binance, filed in June, followed a yearslong investigation by the DOJ, various arms of the Treasury Department, and the Commodity Futures Trading Commission. This record settlement with the U.S. government concluded these investigations, but did not include the SEC, which is pursuing its separate case against the exchange and Zhao.
