Crypto exchange Binance, its U.S.-based subsidiary Binance.US and its CEO Changpeng Zhao requested the court to dismiss a lawsuit filed by the U.S. Securities and Exchange Commission (SEC).

In a 60-page joint motion filed on Sept. 21, lawyers for Binance and Zhao said that the SEC’s lawsuit had no foundation under the currently enacted securities laws.

The SEC sued Binance, Binance.US and Zhao in June, asserting that the crypto exchanges, at the direction of Zhao, had violated securities laws by offering unregistered securities to U.S. investors. 

Binance’s lawyers claim that the SEC is overreaching its authority, and in attempting to claim regulatory power over the crypto industry, is distorting the context of securities laws. This is despite the fact that SEC Chair Gary Gensler publicly acknowledged that no regulatory framework existed under its authority as recently as 2021, the lawyers said. 

“In late 2022, however, the SEC suddenly reversed course and asserted that virtually all crypto assets are securities subject to its authority. Soon after, and despite ongoing legislative debate regarding crypto assets, the SEC began enforcing its new position through litigation,” stated the filing.

The argument that the regulator overstepped its authority is one that Binance has used before, in its motion to dismiss a lawsuit filed by the U.S. Commodities and Futures Trading Commission (CFTC) that alleges the firm violated derivatives laws by offering its products to U.S. customers. 

Trading volumes on Binance.US have plummeted after news of the SEC’s lawsuit, and the exchange has now transitioned to being a “crypto-only” exchange. Kaiko data showed that weekly trading volumes on the exchange have fallen to $40 million, marking a 99% decline from the $5 billion recorded in March.