Almost three weeks after venture capital firm Paradigm slammed the US Securities and Exchange Commission (SEC) for overreaching its jurisdiction in its legal action against Binance, the US-based advocacy group Chamber of Digital Commerce has raised similar objections.
SEC’s alleged mishandling of the Binance lawsuit comes under scrutiny, again
In an amicus brief filed Thursday, the advocacy group said the SEC has been using its overweening power to penalize crypto businesses. The organization argues that the regulator’s clamp down on the industry is driving crypto businesses overseas and stifling innovation.
“The SEC continues to try to regulate the entire digital asset ecosystem through enforcement actions, instead of issuing guidance or going through the proper notice and comment rulemaking channels. The enforcement actions are paralyzing the market and sending digital asset innovation overseas,” said Cody Carbone, Vice President of Policy at the Chamber of Digital Commerce.
Moreover, the advocacy group took aim at the SEC for employing an “enforcement-based method” in its dogged attempt to classify digital assets as securities without proper authorization from the US Congress. While the lawmakers are still working on a regulatory framework, the SEC’s dogged pursuit of crypto businesses, with the sole motive of chastising them, could hurt the industry and its stakeholders, the Chamber of Digital Commerce says.
Chamber of Digital Commerce calls for dismissal of Binance lawsuit
The organization has urged the court to dismiss the SEC’s lawsuit against Binance, arguing that the SEC has been overstepping its regulatory boundaries, digital assets do not constitute investment contracts, nor do token transactions meet the criteria for Exchange Act registration requirements.
The remarks come less than a month after Paradigm accused the US securities regulator of sidestepping standard rulemaking procedures in its case against Binance. Paradigm went on to claim that the US securities regulator has been using the Binance case to alter the law.
Binance embroiled in legal tussle with SEC
Notably, Wall Street’s top cop sued Binance US, the exchange’s international arm Binance Holdings, and founder Changpeng Zhao in 2020. The SEC insists Binance and Zhao — who is better known by his initials “CZ” — were operating an unregistered, and therefore, illegal crypto exchange and misleading investors.
Last month, the SEC urged a DC court to order an inspection into Binance US, citing “risky custody asset.” However, Binance has denied any wrongdoing and described the SEC’s request for documents pertaining to its business practices as “unreasonable.”