- Binance has accused the CFTC of overstepping its jurisdiction in its first response to the charges made against it
- The CFTC filed a civil enforcement action against Binance in March, charging it with violations of the Commodity Exchange Act and offering unregistered derivatives products in the U.S.
- Binance has denied the charges, stating that the CFTC fails to meet legal standards in several allegations and lacks jurisdiction to charge it
Binance has accused the U.S. Commodity Futures Trading Commission (CFTC) of overstepping its jurisdictional boundaries in its first filing since the agency charged the exchange with violating the Commodity Exchange Act and related federal regulations. In a motion to dismiss the lawsuit, Binance contends that it does not operate in the U.S. and that its CEO, Changpeng Zhao, does not reside in the country. Its principle argument, which relates to six of the seven charges, is that as a foreign entity, Binance is not bound by U.S. laws.
Binance Facing Plethora of Charges
The CFTC filed a civil enforcement action against three entities that operate the Binance platform as well as Zhao and Samuel Lim, Binance’s former chief compliance officer, in March. The complaint charges the defendants with numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations, alleging that Binance knowingly disregarded applicable provisions of the CEA and engaged in a calculated strategy of regulatory arbitrage.
Alongside these allegations are claims that Binance offered unregistered derivatives products in the country, including cryptocurrency trading services and futures and options. The charges, if proven, could see Binance paying out tens of billions of dollars in fines and restitution, with the very future of the company at stake if it is found guilty.
Binance Says CFTC Lacks Jurisdiction
Binance was expected to deny the charges and did so in a filing yesterday, claiming that the CFTC is overstepping its jurisdiction by attempting to regulate a company based outside the U.S. It also argues that several of the charges fail to meet the legal standards set by statutory requirements.
Regarding the seventh charge, which accuses Binance of trying to evade the Commodity Exchange Act, the exchange asserts that the CFTC does not meet the necessary requirements, making the charge invalid.
A ‘not guilty’ plea was anticipated given the responses from Zhao at the time, and it is expected that the charges brought by the Securities and Exchange Commission will meet with a similar response.
