The crypto exchanges openly declare their readiness to clash with the SEC, inspired by their recent courtroom victories. Binance.US expressed its eagerness to defend itself against the SEC following a court ruling that allowed the regulator's case against the exchange to move forward. Buoyed by the recent court decision in favor of Binance, Coinbase has filed a notice seeking an appellate review to ensure the consistent application of securities laws to crypto assets in its ongoing legal battle with the SEC.

More on SEC: The SEC Has Lost Control Over The Crypto Sector by Approving Ether ETF

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Source: K33 Recearch

SEC Sues Binance $ Co, Accuses CZ of Breaking the Rules

In June 2023, the SEC went after Binance Holdings Ltd., BAM Trading Services, BAM Management U.S., and founder Changpeng “CZ” Zhao, accusing them of violating U.S. securities laws.

The SEC claims that Binance.US customer assets may have been improperly accessed and controlled by Binance's global organization employees outside the U.S.

Binance has countered, stating that it was established to serve customers in full compliance with U.S. laws and regulations, despite past conflicts with the regulator.

At the end of last month, Judge Jackson's ruling in the SEC vs. Binance Holdings Limited case put a definitive end to the SEC's claim that secondary market transactions involving the BNB token on Binance's platform were investment contracts.

Binance.US expressed confidence in its legal standing while fending off securities violation accusations.

“We have always followed the limited guidance the SEC provided to the crypto industry to conduct our business in compliance with regulations,” said Binance.US. “The fight continues.”

The company also criticized the SEC's approach, calling it "regulation by enforcement" and accusing the Commission of politically motivated overreach under its current chairman, Gary Gensler.

Binance.US stated it participated in extensive disclosure processes, during which the exchange believes the SEC has yet to present evidence of any wrongdoing.

We remain confident in our position that the SEC’s case is not supported by facts or law, and that the Commission lacks the authority it seeks to assert.

Despite the legal challenges, the company continue operating smoothly and rolling out new features and updates.

Coinbase Challenges SEC

Taking a page from Binance's successful legal tussles with the SEC, Coinbase has fired off a letter to U.S. District Judge Katherine Polk Failla. Coinbase's lawyers argue that the Binance ruling highlights inconsistencies in how courts apply the Howey test to cryptocurrencies.

The letter claims that the SEC's stance deviates from the established Howey framework, traditionally used to define what constitutes a security. These inconsistencies compel market participants to deal with different regulations based on the jurisdiction.

Paul Grewal, Coinbase’s Chief Legal Officer, wrote in a Monday statement on X:

Liability shouldn’t hinge on which court you end up in or which judge hears your case.

Grewal also pointed out that the SEC’s litigation-focused approach to crypto regulation has led to fragmented legal standards across the country, echoing sentiments from companies like Binance and Consensys.

Moreover, Coinbase has accused the SEC and the Federal Deposit Insurance Corporation (FDIC) of playing dirty in court by withholding documents. Partnering with History Associates Incorporated, Coinbase has filed civil lawsuits against them for failing to comply with the Freedom of Information Act.

These lawsuits demand the release of documents, including “cease-and-desist” letters sent to financial institutions, which reportedly urged them to halt crypto-related activities. The FDIC and SEC withheld these documents, citing various exemptions, prompting Coinbase to take legal action.

Related: Nigeria SEC Wants Crypto Firms To Register in 30-days or Face the Music

Until consistent and clear regulatory guidelines are established, the crypto industry will continue to face regulatory challenges in the U.S. However, it’s heartening to see that the judicial system doesn’t seem as hostile as the SEC towards crypto firms, allowing industry representatives to honestly defend their still-undefined status.

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