SEC v. Binance court showdown is delayed to next week over snowstorm

Binance's big face off with the Securities and Exchange Commission in a D.C. District Court was delayed until next week after a massive snowstorm forced the closure of the courtroom on Friday. 

The crypto exchange, which wants the SEC's lawsuit thrown out, will now face the regulator  on Monday at 10 a.m. ET, according to an order signed by Judge Amy Berman Jackson. Two to three inches of snow hit the D.C. area overnight. 

The SEC sued Binance Holdings Ltd. and its former CEO Changpeng Zhao in June, accusing the crypto exchange of lying to customers, failing to restrict U.S. investors from accessing Binance.com, misdirecting capital to separated investment funds owned by Zhao, and operating as an unregistered exchange, among other charges. The SEC also said 12 tokens on the exchange were securities, including BNB and BUSD. 

Binance will likely argue that the SEC's assessment of what constitutes a security is not correct, in part because a contract is not involved, and argue that the major questions doctrine applies. 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. 

"For more than a decade after Bitcoin launched in 2009, the SEC stood idle as Binance.com and several other crypto platforms grew in plain sight, allowing users to buy and sell crypto tokens without any indication that the SEC would later argue the entire industry was violating the securities laws," Binance said in December in a court filing. "The SEC was on the sidelines for good reason—unlike the CFTC, the SEC lacks statutory authority over exchange sales of crypto assets." 

The SEC has said the case should not be dismissed and argues Binance deliberately did not comply with federal laws. 

"Binance’s Chief Compliance Officer crudely but succinctly summed up this case when he admitted that Binance was 'operating as a fking unlicensed securities exchange in the USA bro,'" the SEC said in a November court filing. "He was right. Defendants now seek to avoid the repercussions of their actions by asking this Court to dismantle decades of foundational precedent upon which the nation’s securities laws operate."

Zhao, also known as CZ, pleaded guilty late last year to anti-money laundering and sanctions violations following years-long probes by federal regulators. Binance agreed to pay $4.3 billion in one of the largest corporate settlements in history. Zhao agreed to pay a $50 million fine and stepped down as CEO. Richard Teng, a Singaporean industry veteran, was then appointed as CEO.  

Coinbase hearing

Friday's scheduled motions hearing would have been the second significant face-off involving the agency and crypto firms this week. 

Coinbase and the SEC took turns in court on Tuesday in front of New York District Judge Katherine Polk Failla. Coinbase, which was sued by the SEC in June for allegedly operating as an unregistered exchange, broker and clearing agency, told the court that tokens available on its exchange were not securities. 

Judge Failla asked the SEC pointed questions on how it defines securities, expressing concern that it may be too broad and sweeping in collectibles — like Beanie Babies.