In its case to dismiss a Commodity Futures Trading Commission (CFTC) lawsuit, Binance filed a complaint to judge Manish S. Shah claimed that the regulatory body does not have “regulatory authority over spot trading”.
The complaint was filed to the Northern District of Illinois Eastern Division as the world’s largest cryptocurrency exchange was sued by the CFTC back in March over alleged showing a ‘knowing’ disregard to the provisions set in place by the US regulator.
The filing focuses on the allegations made against Binance and the validity of suing the company over its presence in the US, which the exchange and its CEO, Changpeng Zhao, states neither the company operates nor Zhao resides in.
Binance believes that the first six charges handed out by the CFTC “do not apply to the foreign conduct alleged”, with an additional seven charges not meeting legal standards set out by its requirements.
The CFTC has described Binance as offering “illegal off-exchange commodity options”, outlining its belief that the exchange is in violation of KYC and AML provisions, failing to to register as a futures commissions merchant and running a poor anti-evasion program.
However, Binance has responded by stating that not only does the CFTC not have authority over spot trading in the US, they are bound to have no regulations for trading abroad.
The filing reads: “There is no dispute that the CFTC has no regulatory authority over spot trading even in the United States, let alone abroad.
“The issue posed by the CFTC’s complaint is whether, when Binance․com began offering additional products in or after 2019—by which point it had already begun to restrict and off-board potential U.S. users—it became subject to certain registration and regulatory compliance provisions of the Commodity Exchange Act (“CEA”) and CFTC regulations.
“Despite 236 paragraphs of allegations – which followed a multi-year investigation in which defendants provided extensive information voluntarily – the CFTC’s complaint fails at the outset.”
Binance is also in the midst of a second regulatory battle with the Securities and Exchange Commission (SEC) – after the financial regulator made 13 charges against the exchange, most surrounding the alleged circulation of unregistered securities.
