In response to the legal action initiated by the US Commodity Futures Trading Commission (CFTC), Binance, the world’s foremost cryptocurrency exchange, together with its affiliates and founder Changpeng Zhao, has filed a motion seeking to have the case dismissed.
Binance’s legal team has presented a compelling argument, contending that the CFTC’s allegations should be dismissed for several reasons.
Binance’s Legal Defense Challenges CFTC Jurisdiction
The CFTC’s lawsuit, filed on March 27, accused Binance and Changpeng Zhao of operating an intricate network of entities that engaged in digital asset spot and derivative transactions with customers based in the United States.
The defense, in a filing submitted on October 23, asserts that the CFTC’s claims of jurisdiction lack a solid foundation and are impermissibly extraterritorial.
Binance’s legal team argues that the CFTC is attempting to regulate foreign individuals and corporations operating beyond the United States, disregarding the limitations established by the Commodity Exchange Act (CEA).
They contend that Congress did not confer upon the CFTC the authority to extend its regulatory reach globally. Moreover, the defense criticizes the CFTC’s attempt to redefine the definition of a “US person” and expand its jurisdiction overseas.
Furthermore, the defense posits that the CFTC’s claims are deficient in necessary elements and rely on broad, inapplicable legal arguments.
They argue that the allegations do not demonstrate any harm to users of Binance.com and primarily revolve around accusations of non-compliance with registration requirements and compliance rules.
The defense’s stance is that the CFTC’s efforts to use this case as a means to attain worldwide regulatory authority could have consequences far beyond what was initially intended by Congress.
Defense Rebuts CFTC’s Anti-Evasion Assertion
The defense’s motion to dismiss the lawsuit is based on three primary points. First, they argue that the claims should be dismissed due to a lack of personal jurisdiction. They assert that the Complaint fails to establish the necessary connections between Binance, Changpeng Zhao, and the United States.
Second, they contend that certain claims should be dismissed as impermissibly extraterritorial, as they lack the requisite domestic transactions or conduct as required by Supreme Court precedent.
Third, they argue that the CFTC’s anti-evasion claim also fails to meet the necessary elements stipulated by relevant statutes and regulations.
In conclusion, the defense calls upon the court to dismiss the CFTC’s lawsuit against Binance, its affiliates, and Changpeng Zhao on multiple grounds, citing a lack of personal jurisdiction, impermissible extraterritorial claims, and a failure to plead necessary elements.
The outcome of this motion holds significant implications for the regulatory landscape surrounding cryptocurrency exchanges and their operations.
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