Binance Slams CFTC Complaint, Calls It “Lacking Substance”

Binance, the formidable titan among global cryptocurrency exchanges, has taken a bold stance against the U.S. Commodity Futures Trading Commission (CFTC) by filing a motion to dismiss a lawsuit brought against it. The move showcases the firm’s unwavering determination to challenge what it perceives as the CFTC’s overreaching regulatory actions, raising crucial questions about the jurisdiction and authority of U.S. regulators over international crypto exchanges.

Is this going to change the state of affairs? Let’s dive in.

Challenging the Jurisdiction

The cornerstone of Binance’s legal defense is the claim that the CFTC is extending its jurisdiction beyond its legal boundaries. Binance does not operate in the U.S., and its CEO, Changpeng “CZ” Zhao, is not a U.S. resident. Thus, according to the exchange, the first six charges brought by the CFTC “do not apply to the foreign conduct alleged here.” The motion argues that several of the charges fail to meet the legal standards outlined by statutory requirements.

Dismissing Allegations

Binance is also calling for the dismissal of the seventh charge, which alleges that the exchange is evading the Commodity Exchange Act (CEA). The firm argues that the CFTC has not fulfilled the necessary requirements to levy such a charge.

According to the motion, “There is no dispute that the CFTC has no regulatory authority over spot trading, even in the United States, let alone abroad.” The crux of the issue, as identified by the CFTC’s complaint, hinges on whether Binance became subject to certain registration and regulatory compliance provisions of the CEA and CFTC regulations when it began offering additional products in or after 2019.

Slamming the CFTC

Binance further criticizes the CFTC’s complaint, dismissing it as lacking substance despite its extensive 236-paragraph allegations. The exchange points out that it voluntarily provided significant information throughout the multi-year investigation.

But, what were their claims?

The CFTC’s initial lawsuit against Binance was filed in March, alleging that the company offered unregistered derivatives products in the U.S., including cryptocurrency trading services and futures and options products. The regulator also claimed that Binance did not properly supervise its business, lacked a robust know-your-customer or anti-money laundering program, and failed to register as a futures commissions merchant, designated contract market, or swap execution facility.

Adding to Binance’s regulatory challenges in the U.S., the Securities and Exchange Commission (SEC) has also filed a lawsuit against the company. While the specifics of the SEC’s allegations remain undisclosed at this time, the situation underscores the mounting pressure on the global crypto giant.

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Will Binance be able to successfully dismiss the lawsuit? Only time can tell.