In a bold move, Binance, the world’s largest crypto exchange by trading volume, has filed a motion to dismiss the charges brought against it by the United States Securities and Exchange Commission (SEC), leveraging a recent court ruling in favor of Ripple and XRP. The motion highlights the regulatory body’s reliance on past initial coin offerings (ICOs) cases and argues that the SEC lacks the authority to regulate the cryptocurrency industry.
Ripple and XRP Court Ruling as a Game Changer
Binance’s defense strategy takes a significant turn with its reference to a recent court ruling in Ripple’s favor. The ruling acknowledged that secondary market XRP sales did not fall under securities transactions. By emphasizing this precedent, Binance questions the SEC’s classification of crypto trading on its platform as securities transactions.
The memorandum of law in Binance’s motion to dismiss states, “The undisputed facts [XRP victory] showed no relevant relationship between the parties to the sale that could transform the sale of a digital asset into the sale of an investment contract.”
SEC’s Overreach and Lack of Legislative Authority
Beyond leveraging Ripple’s win, Binance strongly argues that the SEC’s lawsuit represents an overreach of its regulatory powers. The filing quotes SEC Chairman Gary Gensler’s comments from May 2021, where he admitted the absence of a regulatory framework for overseeing the cryptocurrency industry.
Binance points out that Congress has not enacted new legislation to expand the SEC’s authority in the digital asset space since Gensler’s acknowledgment. Consequently, Binance asserts that the SEC is attempting to achieve through litigation what it lacks through legislation, thereby surpassing the regulatory powers granted by Congress.
Precedent and Regulatory Clarity
The outcome of Binance’s motion remains uncertain, as Ripple’s court ruling is on the verge of being appealed by the SEC, which eagerly needs the presiding judge’s approval. Nevertheless, this recent development underscores the importance of Ripple’s efforts so far.
Leveraging Ripple’s win could potentially lead to further regulatory clarity for the United States cryptocurrency industry. By challenging the SEC’s reliance on ICO cases and questioning its jurisdiction, Binance brings a fresh perspective to the ongoing legal battle.