Binance: US Law “Does Not Control the World”

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  • Binance has continued to dispute the jurisdictional reach of the CFTC, arguing that US law cannot control global activities in their legal battle
  • The CFTC has accused Binance of violating the Commodity Exchange Act and regulatory arbitrage, which could lead to significant fines and potential US bans
  • Binance’s defense rests on the claim that it does not operate in the US, and the CFTC should not have jurisdiction over global cryptocurrency-related activities

Binance has argued that US law “does not control the world” in its latest bid to have its legal battle against the Commodity Futures Trading Commission (CFTC) tossed. The CFTC sued Binance, CEO Changpeng Zhao, and others in March, charging them with numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations. The defendants have already accused the CFTC of jurisdictional overreach and they reaffirmed their stance yesterday, arguing that the CFTC is overstepping its boundaries by taking action against a company that on paper has sought to avoid US business.

Binance Sticks With Jurisdictional Argument

The CFTC accused Binance, Zhao, and others of knowingly disregarding applicable provisions of the CEA and engaging in a calculated strategy of regulatory arbitrage. The charges could see Binance banned from operating in the US and pay out tens of billions of dollars in fines and restitution, with the very future of the company at stake if it is found guilty.

In July, the defendants contended that Binance does not operate in the US and that Zhao does not reside in the country, meaning the CFTC had no power over them. Yesterday it reaffirmed this approach, telling the CFTC to get back in its box:

The CFTC relies on new and broad arguments that would allow it to regulate any activity in cryptocurrency (or other assets) related to a derivatives product anywhere on the globe. U.S. law governs domestically but does not control the world. Congress did not make the CFTC the world’s derivatives police.

While it is natural for Binance to attempt to kick the case in this way, if the CFTC can prove that Binance served US customers, whether it intended to or not, it could damage its argument and leave it liable if found guilty.