Binance and CZ Challenge CFTC, Aim to Dismiss Lawsuit

Binance, one of the world’s largest cryptocurrency exchanges, and its co-founder Changpeng Zhao (CZ) have taken a legal stance against the United States Commodities and Futures Trading Commission (CFTC) by requesting the dismissal of the lawsuit filed against them on July 27. In a court filing submitted by their legal representatives in Chicago, Binance and CZ challenge the CFTC’s regulatory authority and accuse the agency of exceeding its jurisdiction.

The attorneys argue that the CFTC is attempting to regulate foreign individuals and corporations operating outside the United States, which they believe surpasses the agency’s statutory jurisdiction and disregards established principles of comity with foreign sovereigns.

The motion for dismissal emphasizes that the first six charges presented by the CFTC do not relate to the foreign conduct at the heart of the case, and certain charges fail to meet the required legal standards. They specifically question the validity of the seventh charge, which accuses Binance of evading the Commodity Exchange Act (CEA), claiming that the CFTC itself lacks sufficient grounds to support such an accusation.

The core argument in the motion centers on the CFTC’s regulatory authority over spot trading, both domestically and internationally. The legal team questions whether Binance.com should be subjected to specific registration and regulatory compliance provisions of the CEA and CFTC regulations, considering its introduction of additional products after 2019 and its prior restrictions on potential U.S. users.

The CFTC initiated the lawsuit against Binance in March, alleging that the exchange provided unregistered derivatives products in the U.S., including cryptocurrency trading services, futures, and options products. The regulator also accused Binance of inadequate supervision, lacking a reliable know-your-customer (KYC) or anti-money laundering (AML) program, and failing to register as a futures commissions merchant, designated contract market, or swap execution facility.

In addition to the ongoing CFTC lawsuit, Binance faces further legal challenges in the U.S. due to a separate lawsuit filed by the Securities and Exchange Commission (SEC) in June. The company’s legal team is actively responding to these allegations, seeking to defend Binance’s position and operations within the realm of cryptocurrency trading and global regulatory frameworks.

For more news, find me on Twitter or subscribe to my YouTube channel.

What is your opinion on this issue? Leave me your comment below! I’m always interested in your opinion!

Leave a Reply

Your email address will not be published. Required fields are marked *

Recommended for you