Binance used ‘tortured’ interpretation of law in bid to toss suit, says SEC
Binance’s arguments used in its motion to dismiss a lawsuit from the United States securities regulator relies on an incorrect legal analysis and have no basis in law, the regulator has argued.
In a Nov. 7 court filing the SEC rebuffed Binance’s earlier bid to toss the regulator’s suit saying no court has adopted Binance’s “tortured interpretation of the law.”
The SEC sued Binance in June alleging it, Binance.US and its founder Changpeng “CZ” Zhao sold unregistered securities and failed to register as an exchange in the United States.
Binance argued the SEC failed to introduce crypto guidelines, misinterpreted securities laws and applied them to crypto and called the suit an overstep of its authority.
In its latest rebuttal, the SEC claimed Binance “never complied” with federal securities laws which was “a deliberate choice.”
“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.’ He was right.”
It added Binance’s arguments that compared crypto to “supermarket items like oranges […] are absurd” and claimed the crypto exchange’s crypto sales are investment contracts under the Howey test.
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The regulator reiterated its claims the BNB (BNB) initial coin offering violated securities laws and Binance USD (BUSD) along with the yield-bearing staking, Vault and Earn programs are investment contracts.
It also rebuffed Binance’s argument that the suit violated the major questions doctrine — a 2022 U.S. Supreme Court ruling saying Congress doesn’t delegate authority to agencies, which other crypto firms have cited in their aim to push back on the SEC’s claimed authority.
The SEC claimed granting Binance’s dismissal request would “dismantle decades of foundational precedent upon which the nation’s securities laws operate” and in its place would be a “rigid framework” that upends the “broad, flexible regime” of the current laws.
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The Conservatives have urged Sir Keir Starmer to publish all concerns raised by the security services about the appointment of sacked US ambassador Peter Mandelson.
Shadow cabinet office minister Alex Burghart said his party would push for a vote in parliament demanding the government reveal what issues the security services had in relation to Lord Mandelson’s relationship with the disgraced sex offender and financier Jeffrey Epstein.
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Peter Mandelson was sacked as the UK’s ambassador to Washington on Thursday. Pic: PA
It comes after Sky News’ deputy political editor Sam Coates revealed that Number 10 appointed Lord Mandelson to the Washington role despite the security services’ reservations about the move.
Mr Burghart said material from the security services is not usually made public, but that a substantial amount of information was already in the public domain.
He told Sky News Breakfast: “What we’re going to do is we’re going to try and bring a vote in parliament to say that the government has to publish this information.
“It will then be up to Labour MPs to decide whether they want to vote to protect Peter Mandelson and the prime minister or make the information available.”
Mr Burghart said he had spoken to Labour MPs who were “incredibly unhappy about the prime minister’s handling of this”, and that it would be “very interesting to see whether they want to be on the side of transparency”.
Tory leader Kemi Badenoch said she believed Lord Mandelson’s appointment revealed that the prime minister “has very bad judgment”.
“It looks like he went against advice, security advice and made this appointment…and what we’re asking for is transparency.”
The Liberal Democrats have also called for parliament to be given a role in vetting the next US ambassador.
“I think it will be right for experts in foreign affairs on the relevant select committee to quiz any proposal that comes from 10 Downing Street, and so we can have that extra bit of scrutiny,” the party’s leader Ed Davey told broadcasters.
The former UK ambassador to France, Lord Ricketts, said the government should not be “rushing into an appointment” to replace Lord Mandelson.
“I would urge the government to take their time, and I would also make a strong case to the government to go for a career diplomat to steady the ship after this very disruptive process,” he said.
Labour MP Chris Hinchcliff posted on X that the former US ambassador should also be removed from the House of Lords.
Nigel Farage said Sir Keir’s decision to appoint Lord Mandelson as UK ambassador to the US was a “serious misjudgement” by the PM.
“We don’t yet know what the intelligence briefings would have said, but it looks as though Morgan McSweeney, the prime minister’s right-hand man, and the prime minister, ignored the warnings, carried on,” he said.
“He was then reluctant to get rid of Mandelson, and he’s now left himself in a very vulnerable position with the rest of the parliamentary Labour Party.
“It is about the prime minister’s judgement, but it is also about the role that Morgan McSweeney plays in this government.”
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Reform UK leader Nigel Farage says Keir Starmer ignored the warnings about Lord Mandelson.
The timing of the sacking comes ahead of Donald Trump’s state visit next week, with the US president facing questions over his own ties with Epstein.
The prime minister sacked Lord Mandelson on Thursday after new emails revealed the Labour grandee sent messages of support to Epstein even as he faced jail for sex offences in 2008.
In one particular message, Lord Mandelson had suggested that Epstein’s first conviction was wrongful and should be challenged, Foreign Office minister Stephen Doughty told MPs.
The Foreign Office said the emails showed “the depth and extent of Peter Mandelson’s relationship with Jeffrey Epstein is materially different from that known at the time of his appointment”.
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Mandelson exit ‘awkward’ before Trump state visit
Downing Street has defended the extensive vetting process which senior civil servants go through in order to get jobs, which has raised questions about whether or not they missed something or Number 10 ignored their advice.
The prime minister’s official spokesman also said yesterday that Number 10 “was not involved in the security vetting process”.
“This is managed at departmental level by the agency responsible, and any suggestion that Number 10 was involved is untrue,” he told reporters.
Asked repeatedly if any concerns were flagged to Downing Street by the agencies that conducted the vetting of Lord Mandelson, he did not dismiss the assertion, repeating that Number 10 did not conduct the vetting.
Read more:
Serious questions remain about Starmer’s political judgement
Mandelson’s exit leaves Donald Trump’s state visit in the lurch
Speaking to Sky News this morning, Scotland Secretary Douglas Alexander said his reaction to the publication of the emails was one of “incredulity and revulsion”.
He said he was “not here to defend” Lord Mandelson but said the prime minister “dismissed” the ambassador when he became aware of them.
The cabinet minister said Lord Mandelson was appointed on “judgement – a judgement that, given the depth of his experience as a former trade commissioner for the European Union, his long experience in politics and his policy and doing politics at the highest international levels, he could do a job for the United Kingdom”.
“We knew this was an unconventional presidential administration and that was the basis on which there was a judgement that we needed an unconventional ambassador,” he said.
Mr Alexander added: “If what has emerged now had been known at the time, there is no doubt he would not have been appointed.”
The question being asked everywhere today is “how did it happen”? Because the vibe out of Downing Street this morning seems to be that nobody anywhere did anything wrong, processes were followed, and everything went by the book.
But can they really, honestly, believe that?
To recap, the reason that everyone is asking is to try and discern whether the failings are a consequence of a fundamental, unfixable flaw at the heart of Keir Starmer’s operation.
Politics latest: Starmer ‘very vulnerable’ following Mandelson revelations
Yesterday, we told you that the security services had raised red flags about the appointment of Peter Mandelson, yet Number 10 went ahead.
The story was nuanced. We did not say that Peter Mandelson had failed a deep vetting, just that concerns were relayed and the appointment went ahead.
We put the story to Downing Street, and – being candid – I did not understand what their official response meant, beyond it quite obviously not being a denial.
As a response, Number 10 said to us that the security vetting process is all done at a department level – with no Number 10 involvement.
To a wider group of political journalists, an hour and a half after we aired the story, Number 10 said they were “not involved in the security vetting process. This is managed at the departmental level”.
Today, the line from Downing Street seems to be that there was no official level block on the appointment, so it went ahead.
Although The Times has reports from allies of Lord Mandelson claiming he disclosed everything, the exact chain of events remains opaque.
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The messages inside Epstein ‘birthday book’
But for those who want to understand the inner workings of government, here is more detail about the two types of check that would have gone on, and what this tells us.
Firstly, by the security services.
The Cabinet Office led both on vetting and separately on propriety and ethics (a form of government HR) but in effect, it’s multi-agency and multi-department.
In this instance, potentially multiple agencies would likely feed into the Foreign Office, or FCDO.
FCDO then act as a liaison for vetting – what I’m told is known as a “front face” – and an FCDO official takes a note to tie everything together.
We are being told that this amounts to a binary decision.
So, potentially, an FCDO official ties up the findings from both agencies and departments in one place and that’s given to the Permanent Under Secretary at the department (Philip Barton, later Olly Robbins) and Number 10.
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‘Was PM aware of Mandelson’s intimate relationship with Epstein?’
So the recommendations can both be “by a Foreign Office official” and from security services at the same time. That potentially explains some reporting this morning.
I believe, ultimately, I was told about the security service red flags because they do not want to share the blame for a catastrophic intelligence miss that has harmed this government severely.
And is a situation like this ever binary? If there are matters of judgement for the PM to weigh up, are we honestly saying they are kept from him?
Sources tell me there are always conversations around the side of these processes: it would be recklessly incurious of Number 10 if this had not been the case for someone who already resigned twice and whose association with Jeffrey Epstein was in the public domain.
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Serious questions remain about Starmer’s political judgement
Mandelson’s exit leaves Donald Trump’s state visit in the lurch
But then there is a second, Cabinet Office-led process which is arguably more important.
There will have been checks on Lord Mandelson by examining what’s in the public domain.
It is, quite simply as one person said to me, a “Google check”.
This, too, must have flagged stories about Lord Mandelson’s relationship with Epstein post-conviction, and gone to Number 10.
At this point, the question is why No 10 did not see the sheer enormity of the risk this posed and pressed ahead anyway.
Who thought this was okay, and why?
There is a witch-hunt vibe to the Parliamentary Labour Party right now.
Now – and forever – there will be footage of Sir Keir Starmer in the Commons chamber defending keeping an ally in place who admitted a close relationship with a known paedophile after conviction and a jail sentence, before sacking him the next day.
The previous week, he was defending another ally who had avoided tax, before sacking her two days later.
The damage is likely to be immense.
Politics
Two scandals and two allies gone in two weeks – serious questions remain about Starmer’s political judgement
Jeffrey Epstein and Peter Mandelson, the paedophile and the peer.
It was a friendship that endured even beyond Epstein’s convictions and one on Thursday that ended Lord Mandelson’s political career.
Politics Live: Starmer accused of ‘blatant disregard for national security considerations’
When emails emerged of exchanges between the two men showing Lord Mandelson remaining supportive of Epstein even after he was convicted for the sex trafficking of underage girls, it was clear he had to go.
Lord Mandelson tried to cling on. The PM summarily relieved him of his duties.
There had initially been an appetite to keep him, in order to avoid embarrassing Donald Trump, who himself is being asked questions about his association with Epstein – and hates it.
But when these emails emerged, it was clear to No 10 that the scandal would blow up the state visit and Mandelson had to go.
But what was also true was that even attempting to keep him in these circumstances could blow up Sir Keir Starmer.
The parliamentary party – and particularly many of the women MPs – were absolutely furious that Mandelson had backed a convicted paedophile against women and girls who had, to quote one victim, been passed to men by Epstein like fruit trays.
The spectre of a powerful man like Mandelson trying to protect him and even the thought of the PM trying to row in behind was absolutely unconscionable.
As Harriet Harman said on our Electoral Dysfunction podcast before he was sacked: “These young women talked about the ruination of their lives by this man abusing his wealth and his power.
“And the idea that Peter Mandelson sided with Epstein in that situation – and this is always the question – whose side are you on?
“You’ve got to be on the side of the vulnerable and not against the person who commits criminal offences, abusing their power.”
Harman also said she thought the prime minister would have been in “anguish” over having to defend Mandelson in the Commons.
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Harriet Harman, Ruth Davidson, and Beth Rigby react to the news
He looked almost as green as the green benches on Wednesday as he insisted he had full confidence in his ambassador, despite warnings from Mandelson himself that more embarrassing material was about to emerge.
When that material did emerge, I understand that the PM spent the evening in Downing Street going through the material and then summoned his new Foreign Secretary Yvette Cooper, who has been a tireless champion in the fight to end violence against women and girls, for a meeting in which they decided to sack Mandelson.
Read more:
No 10 appointed Mandelson despite concerns
Analysis – why wasn’t Mandelson fired yesterday?
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Sky’s US Correspondent Mark Stone provides analysis on the impact this may have on UK-US relations, as the President’s state visit to the UK approaches
That the US ambassador didn’t go of his own accord has angered many MPs and probably the PM, who has a record of prosecuting child sex offenders and made halving violence against women and girls a priority for this government.
Now Mandelson has gone. But, with the end of that comes new questions.
Questions about Keir Starmer’s political judgement.
This is not the first time Lord Mandelson has resigned in disgrace.
He stepped down as trade secretary over a loan from a colleague he failed to register under Tony Blair, and then quit again as Northern Ireland secretary over a cash for passports scandal.
And now the question is, in light of the Epstein connection, why did Starmer let him back in?
There is talk around Westminster that his key advisers had backed the move and Starmer had some reservations.
As well he might, because in the end, the scandal of it all stops at the PM’s door.
There are questions as to whether No 10 ignored concerns raised by the appointment and Badenoch is asking for full transparency.
My colleague, Sam Coates, was told by two sources that the security services did flag concerns as part of the process.
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No 10 went ahead with the appointment anyway, Sky News understands
It is not known whether all of the detail was shared with the prime minister personally.
The prime minister’s official spokesman said No 10 “was not involved in the security vetting process”.
Badenoch said the latest revelations “point yet again to the terrible judgement of Keir Starmer”.
She added that it is “imperative that all documents relating to Peter Mandelson’s appointment are released immediately”.
Then there is a bigger picture.
Two weeks into a supposed reset, two scandals and two key figures gone from government.
This was a PM who promised to do politics differently and clean up after the scandal-ridden Tory years.
Peter Mandelson’s return to government and ousting in this manner casts a long shadow over the PM and that promise, and raises serious questions about the PM’s political judgement.
It also casts a shadow over the upcoming state visit.
It was only on Wednesday that No 10 was thinking about trying to keep Mandelson to try to avoid putting the spotlight back onto President Trump.
With the White House, Royal Family and the UK government all tarnished by association with sex offender Jeffrey Epstein, this was an issue they all wanted to avoid and now it is top of the agenda.
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