In response to the lawsuit filed by the US Commodity Futures Trading Commission (CFTC), Binance, the world’s largest cryptocurrency exchange, along with its affiliates and founder Changpeng Zhao, has submitted a motion to dismiss the case.
The legal team representing Binance argues that the allegations made by the CFTC should be dismissed on several grounds.
Binance Lawyers Argue CFTC Oversteps Bounds In Lawsuit
The CFTC’s lawsuit, filed on March 27, accused Binance and Changpeng Zhao of operating an opaque network of entities that solicited and provided digital asset spot and derivative transactions to US-based customers.
The defense’s filing, submitted on October 23, contends that the CFTC’s claims of jurisdiction are “unfounded” and “impermissibly extraterritorial.”
The defense argues that the CFTC seeks to regulate foreign individuals and corporations operating outside the United States, disregarding the limitations of the Commodity Exchange Act (CEA).
Binance’s lawyers assert that Congress did not grant the CFTC the authority to extend its regulatory reach worldwide. The defense also criticizes the CFTC’s attempt to redefine the definition of a “US person” and expand its power overseas.
Furthermore, the defense asserts that the CFTC’s claims lack necessary elements and rely on broad, inapplicable legal arguments.
The defense argues that the allegations fail to demonstrate any harm to users of Binance.com and primarily focus on allegations of non-compliance with registration requirements and compliance rules.
The legal team further contends that the CFTC’s efforts to use this case to achieve worldwide regulatory reach would have far-reaching consequences beyond the scope intended by Congress.
Defense Counters CFTC’s Anti-Evasion Claim
The defense’s motion to dismiss the lawsuit is based on three main points. First, they argue that the claims should be dismissed due to a lack of personal jurisdiction. The defense asserts that the Complaint fails to establish the contacts between Binance Changpeng Zhao and the United States.
Second, they contend that certain claims should be dismissed as impermissibly extraterritorial, as they lack domestic transactions or conduct required under Supreme Court precedent.
Third, they argue that the anti-evasion claim made by the CFTC also fails to meet the necessary elements under relevant statutes and regulations.
In conclusion, the defense requests the court to dismiss the CFTC’s lawsuit against Binance, its affiliates, and Changpeng Zhao on multiple grounds, citing lack of personal jurisdiction, impermissible extraterritorial claims, and failure to plead necessary elements.
The outcome of this motion will have significant implications for the regulatory landscape surrounding cryptocurrency exchanges and their operations.
As of the current update, Binance Coin (BNB) is being traded at $223, reflecting a 2% increase over the past 24 hours and a notable 6% increase within the thirty days.
Featured image from Shutterstock, chart from TradingView.com