Binance to appeal in Washington court to dismiss SEC fraud lawsuit

Binance vs SEC: Binance is set to face off against the US Securities and Exchange Commission (SEC) in a Washington courtroom on Friday, marking the second hearing this week involving the regulatory body and a cryptocurrency exchange.

The world's largest crypto exchange will request a federal judge to dismiss a lawsuit filed by the SEC in June. The regulatory body alleges that Binance, along with its CEO and founder Changpeng Zhao, and the operator of Binance.US, engaged in activities such as artificially inflating trading volumes, diverting customer funds, failing to restrict US customers from its platform, and providing misleading information to investors regarding its market surveillance controls. Additionally, Binance is accused of facilitating the trading of certain crypto tokens classified as securities by the SEC.

This legal development follows a similar hearing involving the SEC and US exchange Coinbase just two days prior. However, Coinbase faces accusations of operating as an unregistered securities exchange and does not face fraud charges.

BAM Trading, the operator of Binance.US, has contested the SEC's case, asserting in court filings that the regulatory body has not substantiated its claim of fraud against Binance.

Binance, echoing arguments made by Coinbase's legal team, maintains that the SEC lacks the authority to oversee crypto assets. Binance Holdings had previously agreed to a $4.3 billion settlement with the US Department of Justice and Commodity Futures Trading Commission last year, with Zhao pleading guilty to violating US laws related to money laundering.

Despite these settlements, the SEC's case against Binance's core business model persists. The lawsuit is part of a series of actions taken by the SEC against crypto firms, reflecting a shift in focus from digital token sellers to companies involved in trading platforms, clearing activities, and acting as broker-dealers under the leadership of SEC Chair Gary Gensler.

Crypto companies, including Binance, dispute that most tokens meet the SEC's definition of securities and advocate for regulatory legislation to govern the industry.

(With Reuters inputs)