The post Binance Challenges CFTC’s Authority: Jurisdictional Questions Arise appeared first on Coinpedia Fintech News Binance, the global cryptocurrency exchange titan, has filed a motion to dismiss a lawsuit brought against it by the U.S. Commodity Futures Trading Commission (CF...
The post Binance Challenges CFTC’s Authority: Jurisdictional Questions Arise appeared first on Coinpedia Fintech News
Binance, the global cryptocurrency exchange titan, has filed a motion to dismiss a lawsuit brought against it by the U.S. Commodity Futures Trading Commission (CFTC). The filing signals the firm’s resolve to challenge what it perceives as the CFTC’s regulatory overreach, raising fundamental questions about the jurisdiction and authority of the U.S. regulator over international crypto exchanges.
Claiming Legal Grounds: Binance’s Pushback
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.
Binance also called for the dismissal of the seventh charge – the allegation that it is evading the Commodity Exchange Act (CEA) – arguing that the CFTC does not fulfill its necessary requirements.
Spot Trading and Regulatory Jurisdiction
According to the motion to dismiss, “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.
Binance further criticizes the CFTC’s complaint as falling flat despite its extensive 236-paragraph allegations. The exchange points out that it provided considerable information voluntarily throughout the multi-year investigation.
Unregistered Derivatives: CFTC’s Major Claims
The CFTC initially sued Binance in March, asserting 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 strong 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 woes in the U.S., the Securities and Exchange Commission (SEC) has also filed a lawsuit against the company. The SEC’s specific allegations against the crypto exchange remain undisclosed at this time.