Binance calls for dismissal of CFTC charges citing lack of jurisdiction Binance calls for dismissal of CFTC charges citing lack of jurisdiction
Binance asserted that the CFTC lacks jurisdiction over spot trading activities even in the U.S.
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Updated: Jul. 28, 2023 at 9:12 am UTC
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Binance has moved to dismiss the charges filed against it and CEO Changpeng ‘CZ’ Zhao by the U.S. Commodity Futures Trading Commission (CFTC) because the financial regulator acted outside its powers.
“The CFTC’s complaint should be dismissed because it has failed to plead that the Foreign Binance Entities and Mr. Zhao are subject to personal jurisdiction.”
Binance lays on CFTC’s lack of jurisdiction.
According to a July 27 court filing, Binance stated that the CFTC acted outside its jurisdiction with its charges because the exchange does not operate in the U.S., and its CEO does not reside there.
The exchange further argued that the agency did not distinguish between the various Binance entities and chose to lump them together even though each entity has separate roles. The brief noted that the CFTC referred to all the foreign entities as “Binance, adding that the regulator failed to establish personal jurisdiction over each of the named defendants,
The defendants in the case include Binance Holdings Limited, Binance Holdings (IE) Limited, and Binance Holdings (Services) Limited.
Additionally, Binance asserted that the CFTC charges “fails at the outset” because the agency has no regulatory authority over spot trading activities even in the U.S., let alone abroad.
Binance faults CFTC CEA charges.
While it seeks to dismiss the first six counts for lack of territorial jurisdiction, Binance noted that the seventh count should be dismissed because the regulator did not meet the requirements for proving the charge.
Under this count, the CFTC had argued that Binance willfully evaded provisions of the
Commodity Exchange Act (CEA) and its regulations.
However, Binance countered that:
“The CFTC has never before brought a claim under this provision. By shoehorning it into this complaint, the CFTC has chosen to test this antievasion claim for the first time against a novel industry and products that did not even exist and were not remotely contemplated in 2012 when the regulation was promulgated.”
Binance concluded that the Court should entirely dismiss the case because the CFTC failed to “establish jurisdiction over the defendants, fail to establish that the CFTC can enforce the provisions cited in the complaint extraterritorially, and fail to plead essential elements of its claims.”
In March, CFTC sued Binance, alleging that the firm violated U.S. derivatives laws by offering its services to U.S. residents without registering.
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Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
Changpeng Zhao, popularly known as “CZ,” is a notable figure in the cryptocurrency world, primarily for founding and leading Binance, the world’s leading cryptocurrency exchange by trading volume.
