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Binance, the world’s largest cryptocurrency exchange, is set to face the U.S. Securities and Exchange Commission (SEC) in a crucial court battle in Washington next week. The outcome of this high-stakes hearing is anticipated to have far-reaching implications for the regulation of cryptocurrencies.
Previously, Binance sought the dismissal of a lawsuit filed by the SEC in June, accusing the exchange, its CEO Changpeng Zhao, and its U.S. arm of various violations, including artificially inflating trading volumes, diverting customer funds, failure to restrict U.S. customers, and providing misleading information about market surveillance controls. Additionally, Binance was accused of facilitating the trading of crypto tokens deemed unregistered securities by the SEC.
Originally scheduled for Friday, the hearing was postponed due to inclement weather in Washington, D.C. It has now been rescheduled for Monday, January 22, at 10 a.m. EST. Binance is expected to present its case for dismissing the SEC lawsuit before Judge Amy Berman Jackson.
This legal clash follows a recent SEC case against Coinbase, another major U.S. crypto exchange, accused of trading unregistered cryptocurrencies. Both cases are pivotal in determining the SEC’s authority over the cryptocurrency sector.
BAM Trading, operator of Binance.US, argues in court filings that the SEC lacks jurisdiction over crypto assets, echoing a similar stance taken by Coinbase. Binance contends that the SEC has not demonstrated fraudulent activities on its part.
While Binance settled with the Department of Justice and Commodity Futures Trading Commission last year over illicit finance breaches, it has resisted settling with the SEC. Settling with the SEC would mean acknowledging that the tokens in question are securities, potentially impacting Binance’s business model. Sources familiar with the discussions suggest that Binance sees a strong case against the SEC’s alleged overreach and lack of evidence of fraud.
The SEC’s legal pursuit of Binance is part of a broader trend, with the regulator intensifying its scrutiny of crypto firms. The outcome of this case will contribute significantly to shaping the SEC’s regulatory authority within the cryptocurrency industry.
It is noteworthy that the SEC’s track record in crypto-related lawsuits has been mixed, with a notable setback in a case against Ripple, another prominent crypto company, last year.
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