Binance and CEO Changpeng Zhao Plan to Submit Motion to Dismiss CFTC Lawsuit

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Sujha Sundararajan

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Sujha Sundararajan

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July 24, 2023

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Binance, the world’s biggest crypto exchange, billionaire founder Changpeng Zhao – CZ – and the exchange’s former compliance chief Samuel Lim have intended to file two motions to dismiss a complaint from the Commodity Futures Trading Commission (CFTC).

Per a court filing on Monday, Binance and its parties’ response to the CFTC lawsuit is due on July 27.

On March 27, the CFTC filed a complaint against the crypto exchange and its founder CZ, over offering unregistered crypto derivative products in the US, thus violating the law.

The CFTC accused Binance of operating an “illegal” exchange and a “sham” compliance program. The regulator sued Binance, CZ and Lim with “willful evasion” of U.S. law, “while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit.”

That said, the Monday filing noted that the “foreign Binance entities and Zhao intend to file a joint Motion to Dismiss the Complaint.”

“Lim intends to file a separate Motion to Dismiss the Complaint, and join parts of the motion filed by the Foreign Binance Entities and Zhao.”

Binance has also sought to extend a 15-page limit on the brief which would support the Motions to Dismiss, though according to the page limit of Local Rule, support of opposition to any motion shall “not exceed 15 pages without prior approval of the court.”

Binance Faces Pressure From Multiple Regulators

The US Securities and Exchange Commission (SEC) also sued the exchange and founder Zhao with 13 charges, over “blatant disregard of the federal securities laws.”

According to a Binance spokesperson, the SEC’s charges came after “extensive cooperation and recent good-faith negotiations.” The source said,

“Despite our efforts at productive engagement, the SEC abandoned and denied us due process, and instead unilaterally chose to litigate.”

In addition, the cryptocurrency exchange denied SEC’s allegations that its native coin BNB and BUSD are securities.

Following this, the founder CZ tweeted the number ‘4,’ which implies disagreement with something. “Our team is all standing by, ensuring systems are stable, including withdrawals, and deposits. We will issue a response once we see the complaint,” he said at the time.