- Binance is seeking to throw out the CFTC case.
- The crypto exchange has disputed the jurisdiction of the federal agency.
- The firm further accuses the agency of stretching its Congressionally approved powers.
Binance, the world’s largest crypto exchange, is in the eye of a regulatory storm. However, the exchange is not keen on getting wrecked by the storm and is putting up a fight starting with the lawsuit it faces from the United States Commodity Futures Trading Commission.
With its future hanging in the balance, Binance’s latest motion could decide whether it can navigate to calmer seas in the U.S.
Extraterritorial Charges
Binance has filed a motion to dismiss the CFTC case against the exchange, and its Chief Executive Officer Changpeng “CZ” Zhao dubbing the bulk of the charges as “extraterritorial.” In the brief filed on Thursday, July 27, Binance lawyers argue that the crypto exchange and its CEO are foreign entities outside of the jurisdiction of U.S. laws and the CFTC.
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United States law governs domestically but does not rule the world,” Binance attorneys asserted in the filing quoting a 2007 ruling, adding:
"Yet the Commodity Futures Trading Commission ("CFTC") is not content to stop at the water's edge. In this case, the CFTC seeks to regulate foreign individuals and corporations that reside and operate outside the United States outstripping the limits of its statutory authority and treading on deep-rooted principles of comity with foreign sovereigns."Binance’s arguments, however, do not end here, as the crypto exchange also questioned the applicability of existing traditional finance rules to the crypto industry.
Binance: Traditional Finance Rules Do Not Apply to Crypto
As part of further arguments for dismissing the case, Binance accuses the CFTC of stretching rules made for traditional financial markets to cover the crypto industry with no clear path to registration. The exchange argues that the CFTC must either seek redress from Congress or engage in rulemaking to extend its powers.
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In the complaint filed in March 2023, the CFTC accuses Binance of willfully evading U.S. laws from at least July 2019 to offer U.S. customers access to its international derivatives platform. In response, Binance claims that from June 2019, it had already started taking steps to boot out and prevent U.S. customers from using its platform.
The CFTC is expected to respond to Binance’s motion to dismiss on or before September 22 per a minute entry from Judge Manish Suresh Shah on Wednesday, July 26.
On the Flipside
- Binance faces similar charges from the U.S. Securities and Exchange Commission.
Why This Matters
Binance’s regulatory woes have cast doubt about its future, allowing other international exchanges to gain ground. The move to dismiss the CFTC lawsuit represents a significant effort to navigate recent troubles.
Read this to learn more about the CFTC lawsuit against Binance and why it matters:
Binance Lawsuit Explained: Why CFTC Involvement Is a Big Deal
Find out why industry participants have hailed the passing of a new crypto bill as a win for crypto:
Why U.S. Crypto Bill Approval Is Being Heralded as a Victory
