Binance Challenges SEC Over $4.3 Billion Guilty Plea In Legal Dispute

Binance Holdings and its former CEO, Changpeng Zhao, have responded to the United States Securities and Exchange Commission’s (SEC) decision to incorporate Binance’s guilty plea to the DOJ into their respective legal proceedings.

In a filing dated December 12, Binance argued that the SEC’s attempt to include the $4.3 billion guilty plea and settlement agreement with the DOJ in the ongoing case was procedurally flawed and should not be allowed.

The Binance-SEC legal dispute commenced on June 5, 2023, when the agency levied thirteen charges of securities law violations against the company. Among the charges was the management of customer assets on Binance.US by Zhao and Binance, as well as the mixing or redirection of customer assets.

In November, Binance and its former CEO negotiated a separate settlement with the DOJ, which concluded its investigation into the organization. While continuing operations in compliance with U.S. regulations, the agreement permitted Binance to continue operations in exchange for $4.3 billion in penalties.

The SEC argued that the federal court supervising its case against the exchange should consider the acknowledgments and statements made by Binance and Zhao in the settlement reached on November 21, even though they were not explicitly incorporated into the settlement.

The SEC argued that the settlements indicate Binance was cognizant of the fact that it was conducting business in the United States, serving American consumers, and utilizing American infrastructure for transactions.

Binance responded that the SEC failed to demonstrate how the resolutions it reached with the DOJ pertained to any of its “erroneous allegations” against Binance Holdings and Zhao. Binance contended in court documents filed on December 12, 2023, that the SEC notice fails to provide proof for the assertions it made in the litigation initiated in June 2023.

“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.”

In addition, the company argued that submitting a judicial notice cannot substitute for filing a complaint. As per the company’s statement, the SEC’s endeavor to leverage resolutions with other agencies suggests that the SEC is devoid of pertinent information concerning any suitable regulatory authority.