Christiano Ronaldo is facing a class action lawsuit over his NFT collection promotion in partnership with Binance.
Binance CEO Changpeng “CZ” Zhao and his cryptocurrency exchange have filed a motion for the dismissal of the lawsuit brought against them by the United States Securities and Exchange Commission (SEC).
In a filing made in the United States District Court for the District of Columbia, both Binance Holdings and Changpeng Zhao have argued that the SEC has exceeded its authority in pursuing the lawsuit.
The motion, a 60-page document, has noted that the SEC had failed to provide clear regulatory guidance to the cryptocurrency industry before initiating the lawsuit against the crypto exchange. Because of this, Binance and CZ have accused the SEC of attempting to retroactively assert regulatory control over the sector. The motion states:
“The SEC pursues these novel theories retroactively, seeking to impose liability for sales of crypto assets that occurred as far back as July 2017, before the SEC provided any public guidance concerning cryptocurrency… It is clear that the SEC’s lawsuit has no foundation in the currently enacted securities laws.“
Binance takes a from with the legal action
The legal actions against the exchange have had an increasing impact on Binance’s operations, particularly its American branch. Daily trading volumes on Binance.US have plummeted by over 98% since September 2022. On September 13, Binance.US announced a layoff of 30% of its remaining workforce, and its president and CEO, Brian Shroder, also left the company.
According to the filing, the SEC’s lawsuit aims to hold both parties responsible for the ‘illegal’ sale of crypto assets dating as far back as July 2017. At that time, the SEC had not yet issued any public guidelines pertaining to cryptocurrencies. Because of this, the exchange states that the SEC’s case lacks a foundation within the existing securities laws.
Binance’s legal team has also noted that the SEC had failed to understand securities laws and the relevance they play to the cryptocurrency industry. They believe that the SEC’s attempt to assert regulatory jurisdiction over the crypto industry involves a “[distortion] of the text of the securities laws“.