SEC wants Binance guilt admission added to own case

Binance Holdings and its former CEO, Changpeng Zhao, have reacted to a move by the United States Securities and Exchange Commission (SEC) to include Binance’s admission of guilt to the Department of Justice (DOJ) in its own legal proceedings.

In a Dec. 12 filing submitted to the U.S. District Court for the District of Columbia, Binance insisted the SEC’s attempt to include the $4.3 billion guilty plea and settlement agreement with the DOJ in the continuing case was procedurally incorrect and should not be allowed.

The ongoing Binance-SEC legal case began on June 5, 2023, when the agency accused the company of 13 securities law violations, including that Zhao and Binance managed customer assets on Binance.US and mixed or redirected customer assets.

The DOJ negotiated a separate settlement with Binance and its former CEO in November that resolved its probe into the company. The deal required Binance to pay $4.3 billion in penalties and allowed the company to continue operations while adhering to U.S. regulations.

Although not formally included in the settlement, the SEC contended that the federal court overseeing its case against the exchange should consider the statements and acknowledgments made by Binance and Zhao in the Nov. 21 settlement.

The SEC argued that the settlements demonstrate that Binance was well aware it was operating in the U.S., serving U.S. customers and tapping into infrastructure within the U.S. for transactions. In reply, Binance argued the SEC did not show how the resolutions reached with the DOJ were relevant to any of the SEC’s “faulty claims” against Binance Holdings and Zhao.

In court papers submitted on Dec. 12, 2023, Binance argued that the SEC notice does not substantiate its claims in the lawsuit from June 2023. It said:

“The SEC Notice is an impermissible supplemental brief that identifies no new “authority” and instead attempts to introduce new factual information and arguments. This alone is reason to disregard it.”

The company added that presenting a judicial notice is not a substitute for amending a complaint. According to the company’s statement, the SEC’s attempt to leverage resolutions with other agencies indicates a lack of information regarding any appropriate regulatory authority on the part of the SEC.

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