Days before the trial of Sam Bankman-Fried is due to begin in New York, the digital-asset industry is closing ranks against the US government in the case of another influential crypto company: Binance.
Stablecoin issuer Circle Internet Financial Ltd. and crypto investment fund Paradigm Operations submitted filings this week arguing that the Securities and Exchange Commission had overstepped its authority when it filed charges against the world’s biggest crypto exchange in June.
The SEC has alleged that Binance engaged in what the regulator described as “an extensive web of deception, conflicts of interest, lack of disclosure and calculated evasion of the law.”
Read: Crypto’s First Year After the FTX Blowup: ‘It’s Been Miserable’
Binance has called the complaint “disappointing,” and said it had engaged with the SEC in good-faith negotiations to settle the matter.
Paradigm filed an amicus brief in support of Binance’s recent move to dismiss the case. The crypto fund said in its filing that the SEC has pursued “an incoherent approach” to regulating cryptoassets, and that those attempts were premised on a “mistaken assertion” that crypto falls within the remit of existing laws.
“The agency’s arrogation of authority cannot stand, regardless of whatever the SEC may say about a particular defendant—unsavory allegations should not define the scope of an agency’s powers,” Paradigm said in the filing, adding that it has no financial interest in Binance.
Circle, which issues the USDC stablecoin and counts Binance-rival Coinbase Global Inc. as a minority owner, submitted a motion of “support of neither party.” The filing represented a way of protesting the SEC’s decision to treat Binance’s BUSD stablecoin as an unregistered security.
“This marks the first time the SEC has taken enforcement action against a true payment stablecoin,” Circle said in its filing. “Accordingly, this Court’s decision may have significant ramifications for competing issuers like Circle, as well as for the digital-asset ecosystem and US economy more broadly.”
The SEC didn’t immediately return a request for comment made after usual business hours.
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Earlier this week, crypto heavyweights including Coinbase chief executive officer Brian Armstrong and Galaxy Digital’s Mike Novogratz descended onto Capitol Hill to persuade politicians of the industry’s importance to the US economy.
Coinbase has been busy. In addition to its own legal dispute with the SEC, the exchange is mobilizing crypto owners to advocate for the industry ahead of the 2024 US elections and has supported a legal fight to protest government actions against coin mixer Tornado Cash.
Read: Coinbase Seeks to Toss SEC Suit, Citing Ripple Crypto Ruling
