(Reuters) – Binance is due to square off against the U.S. Securities and Exchange Commission in a Washington courtroom on Friday, marking the second high-profile hearing this week involving the regulator and a top crypto exchange.
The world’s largest crypto exchange will urge a federal judge to toss a lawsuit the SEC filed against it in June. The regulator accused Binance, its CEO and founder Changpeng Zhao and Binance.US’s operator of artificially inflating its trading volumes, diverting customer funds, failing to restrict U.S. customers from its platform and misleading investors about its market surveillance controls. Binance was also accused of facilitating trading of several crypto tokens the SEC deemed securities.
Wednesday’s hearing comes two days after a similar hearing in the SEC’s case against U.S. exchange Coinbase, although Coinbase was accused of operating as an unregistered securities exchange and does not face any fraud charges.
BAM Trading, the operator of Binance.US, has already said in court filings that the SEC has not made its case that Binance committed fraud.
Binance has also said the SEC does not have the authority to oversee crypto assets, an argument similar to one laid out on Wednesday by lawyers for rival Coinbase, which is also seeking dismissal of the case against it.
Binance Holdings last year agreed to pay $4.3 billion to settle with the U.S. Department of Justice and Commodity Futures Trading Commission, and Zhao pleaded guilty to breaking U.S. laws designed to prevent money laundering.
But the SEC’s case, which is aimed at Binance’s core business model, is still hanging over the firm. It is also one of a slew of cases the regulator has brought against crypto firms in recent years.
The SEC focused initially on companies selling digital tokens, but under the leadership of chair Gary Gensler has shifted to firms offering trading platforms and clearing activity, and acting as broker-dealers.
Crypto companies deny that most tokens meet the SEC’s definition of a security and say legislation is needed to regulate the industry.
(Reporting by Chris Prentice and Jody Godoy in New York and Hannah Lang in Washington; Editing by Daniel Wallis)
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