Lawyers for crypto exchange Binance and its CEO Changpeng Zhao filed a motion to dismiss a lawsuit from the U.S. Commodities and Futures Trading Commission (CFTC).
In the motion filed in a U.S. District Court on July 27, Binance’s lawyers argued that several of the charges against the crypto exchange and its founder should be dismissed on the grounds that the CFTC outstripped the limits of its statutory authority.
The CFTC violated the premise of U.S. law, which “governs globally but does not rule the world,” and instead seeks to regulate foreign individuals and corporations that reside outside the country, Binance’s lawyers said in the filing.
In March, the CFTC sued Binance and Zhao for allegedly violating trading and derivatives regulations in the U.S. The complaint asserted that Binance actively solicited U.S. customers and aided them in circumventing compliance controls to access the exchange’s trading platform.
Binance’s lawyers claim that the first six of the CFTC’s charges should be dismissed because they “do not apply to the foreign conduct alleged,” given that several provisions only apply to domestic transactions.
“There is no dispute that the CFTC has no regulatory authority over spot trading even in the United States, let alone abroad,” stated the lawyers, adding that the crux of the issue was whether or not Binance.com became subject to regulatory compliance provisions of the Commodity Exchange Act (“CEA”) and CFTC regulations.
According to Binance’s lawyers, although the CFTC had never previously claimed that Binance wilfully evaded CEA regulations, the regulator has shoehorned the claim into its complaint in an attempt to test it against the crypto industry despite the fact that most digital asset products did not exist at the time the regulations were enacted in 2012.