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Cryptocurrency exchange Binance, CEO Changpeng Zhao (CZ), and former Chief Compliance Officer Samuel Lim have filed a motion in a federal court in the US, requesting the dismissal of the lawsuit filed by the US Commodity Futures Trading Commission (CFTC). The lawyers representing Binance and Zhao had previously submitted a motion for the dismissal of the case in a Chicago court.
“CFTC Engaging in Regulatory Overreach”
In their court filing, Binance and CZ’s lawyers described the CFTC’s action as regulatory overreach and stated, “In this case, the CFTC is attempting to regulate foreign individuals and companies operating outside of the US. It is exceeding the limits of its legal authority and violating fundamental principles of friendship with foreign countries.”
In the motion filed with the court, it is argued that the first six charges brought by the CFTC are not appropriate for the protection of friendship principles with foreign countries, and some of the charges do not meet the necessary legal standards required by the laws. Furthermore, Binance argues that the CFTC, which accuses it of violating the Commodity Exchange Act, does not have the authority to make such a claim. The motion to dismiss the case includes the following statement:
There is no doubt that the CFTC has no regulatory authority over spot trading, even in the US, let alone abroad. The issue raised in the CFTC’s complaint is whether Binance.com, when it started offering additional products in 2019 or later, which led to the restriction and disabling of potential US users, was subject to the provisions of the Commodity Exchange Act (CEA) and CFTC regulations regarding registration and compliance. Despite the 236-paragraph allegations following a years-long investigation in which the defendants voluntarily provided comprehensive information, the CFTC’s complaint was invalid from the outset.
Binance Under Pressure from CFTC and SEC
In early March, the CFTC filed a lawsuit against Binance, alleging that the cryptocurrency exchange provided unregistered derivative products, such as cryptocurrency trading services, futures, and options, in the US. The federal regulatory agency also accused Binance of lacking adequate supervision, a reliable customer identification program, and failure to register as a futures broker, designated contract market, or clearing execution facility.
In addition to the CFTC case, Binance has also been targeted by the US Securities and Exchange Commission (SEC) with a lawsuit filed last month.
