Binance Claims CFTC Overreached in Lawsuit against Crypto Exchange

SEC's Response to Challenge Groundbreaking XRP Ruling

U.S. Fed's Vice Chair Barr Suggests CBDC Decision Remains a ‘Long Way’

Turkish Crypto Exchange Thodex CEO Faruk Özer Sentenced to 11,196 Years in Prison for Collapse

Binance, the global crypto exchange, argues in a motion to dismiss the lawsuit filed against it by the U.S. Commodity Futures Trading Commission (CFTC) that the regulator is overstepping its jurisdiction.

The filing strongly asserts that the CFTC's lawsuit against Binance and its CEO, Changpeng "CZ" Zhao, is based on an excessive exercise of authority, given that Binance does not operate within the United States, and CZ does not reside there either. According to the filing, the initial six charges brought forth by the CFTC "do not apply to the foreign conduct alleged here," and moreover, several of the charges fail to meet the legal criteria outlined by statutory obligations.

The filing contends that the seventh accusation against Binance - attempting to circumvent the Commodity Exchange Act - ought to be disregarded due to the agency's failure to fulfill the necessary prerequisites as well.

"There is no dispute that the CFTC has no regulatory authority over spot trading even in the United States, let alone abroad," the motion to dismiss said. "The issue posed by the CFTC’s complaint is whether, when Binance․com began offering additional products in or after 2019—by which point it had already begun to restrict and off-board potential U.S. users—it became subject to certain registration and regulatory compliance provisions of the Commodity Exchange Act (“CEA”) and CFTC regulations. Despite 236 paragraphs of allegations – which followed a multi-year investigation in which defendants provided extensive information voluntarily – the CFTC’s complaint fails at the outset."

In March, the CFTC filed a lawsuit against Binance, accusing the company of providing unregistered derivatives products within the United States. These products included cryptocurrency trading services, futures, and options products. Additionally, the regulatory body asserted that Binance failed to adequately oversee its business operations, lacked an effective know-your-customer (KYC) or anti-money laundering (AML) program, and neglected to register as a futures commissions merchant, designated contract market, or swap execution facility.

Binance is currently facing legal issues in the United States, notably a lawsuit filed by the Securities and Exchange Commission (SEC) last month.