Binance and its CEO, CZ, denied the accusations raised by the US regulator CFTC in March. The first counter-concrete step was taken on Thursday.
Binance challenges CFTC
Binance and its CEO CZ requested the dismissal of the CFTC lawsuit on Thursday, July 27. Exchange representatives submitted the said rejection request to the Chicago court. The counter move came after the bill passed on July 26 giving additional powers to the CFTC.
Binance lawyers accuse the CFTC of overstepping its regulatory mandate and over-intervention. He points out that the CFTC attempts to regulate foreign individuals and companies operating outside of the United States, that this goes beyond the limits of legal authority and interferes with established courtesy principles with foreign monarchs.
According to the application, the first six charges filed by the CFTC do not meet the required legal standards. Additionally, the seventh charge accusing Binance of evading the Commodity Exchange Act (CEA) should be dismissed as the regulator itself failed to meet the requirements for such an accusation, as alleged in the file.
The motion to reject suggests that the CFTC has no regulatory authority over both domestic and international spot trade. It questions whether CEA and CFTC regulations will be subject to specific registration and regulatory compliance provisions, based on Binance․com’s launch of additional products after 2019 and previous restrictions on potential US users.
Charges exceed the jurisdiction of the CFTC
Binance’s primary argument in the counter move is that it’s acting outside the jurisdiction of the US regulator. Another important point the exchange advocated was that the company is not US-based, so it should not be subject to the law. The rejection motion also emphasizes that CZ does not live in the United States.
In March, the CFTC filed a lawsuit against Binance, alleging that the company offers unregistered derivatives. The regulator also accuses Binance of providing insufficient supervision. He also claimed that he lacked a trusted know-your-customer or anti-money laundering program. In addition to the CFTC lawsuit, the leading exchange is also facing legal challenges in the US. As you follow on Kriptokoin.com, the SEC filed new accusations on the stock market on June 5th. A day after that, Coinbase got involved in the process.
Today we charged Coinbase, Inc. with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency and for failing to register the offer and sale of its crypto asset staking-as-a-service program.https://t.co/XPG2gDkxtV pic.twitter.com/hCdVMw8B2v
— U.S. Securities and Exchange Commission (@SECGov) June 6, 2023
In the latest development, Binance denied allegations that it was offering illegal commodity trading products to US users. The filing is based on the CFTC’s view that it went to extremes with its lawsuit against Binance, which does not operate in the US, and its CEO. The motion to reject, which appeared on Thursday, includes the following statements:
There is no argument that the CFTC has no regulatory authority over spot trade, let alone in the US, let alone abroad. The problem posed by the CFTC’s complaint is whether Binance․com is subject to specific registration and regulatory compliance when it begins offering additional products in 2019 or later, at which point it had already begun throttling and disabling potential US users. The provisions of the Commodity Exchange Act (“CEA”) and CFTC regulations—despite the 236-paragraph allegations that followed a multi-year investigation in which defendants voluntarily provided extensive information—the CFTC’s complaint initially fails.
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