Binance units connected to its U.S. arm asked a D.C. district court to dismiss a case brought by the Securities and Exchange Commission, calling allegations of wash trading "unsubstantiated with facts."
The SEC alleged in June that Binance.US, connected to Binance Holdings Limited and BAM, lied about market manipulation prevention and allowed wash trading by an undisclosed "market making" trading firm, Sigma Chain, which is owned by Binance CEO Changpeng Zhao.
"Beyond conclusory allegations and citations to isolated instances where Sigma Chain accounts interacted, the Complaint provides no specific allegations regarding Sigma Chain's alleged misconduct," lawyers representing Binance Holdings Limited and BAM said in a motion to dismiss on Thursday.
Wash trading, under the securities laws, requires a "fraudulent intent to manipulate the market," the lawyers said.
"And the SEC's wash trading allegations, while sensationalized with labels, are unsubstantiated with facts. Accordingly, the Complaint should be dismissed," the lawyers added.
The motion took issue with the regulator's depiction of some tokens offered on the platform as securities including BNB + , BUSD + , SOL + , ADA + , MATIC + , FIL + , ATOM, SAND + , MANA + , ALGO + , AXS + and COTI.
"In this case, the SEC does not allege that any buyer of the Digital Assets on BAM’s Platform was promised anything from the seller (or anyone else, for that matter), let alone the delivery of future value," BAM's lawyers said.
The lawyers also cited the major questions doctrine in the motion, and said the SEC could not regulate digital assets as being securities. The doctrine says that if an agency wants to decide on an issue that has major national significance, it has to be supported by clear congressional authorization.
"Even if the SEC plausibly alleged that transactions involving the Digital Assets were investment contracts (which they have not), the major questions doctrine would require dismissal," the lawyers said.
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