“US Law Doesn’t Control the World” Binance Argues in CFTC Lawsuit
Digital asset exchange Binance says the United States Commodity Futures Trading Commission (CFTC) is attempting to transplant its rules to global markets.
In a recent court filing, the largest cryptocurrency exchange by volume argued that the US regulator is trying to monitor foreign companies that have not traded in the country with its legislation.
“The CFTC’s response brief underscores the pleading deficiencies in the Complaint and confirms that the agency’s overreaching theories of its jurisdiction are unfounded. The agency seeks in this action to regulate foreign individuals and corporations that reside and operate outside the United States…”
This comes as the exchange battles global regulatory scrutiny amid big-name exits from the firm which observers have flagged as “little disturbing” in light of market realities.
In March, the CFTC filed charges against Binance for offering derivatives products targeted at the U.S. market, a claim that the company has long denied.
Binance has stressed on the distinction between its company and the United States entity Binance.US adding that it does not operate in the market.
“U.S. law governs domestically but does not control the world. Congress did not make the CFTC the world’s derivatives police,” the filing states.
Binance.US is also facing similar regulatory challenges from the Securities and Exchange Commission (SEC) following a lawsuit in June alleging that the exchange offered trading services around unregistered securities, commingling user assets, and improper registrations.
Binance asks the court to strike out the case
Per the filing, the exchange argues that it hasn’t breached local laws since it was not involved in the alleged activities but the regulator claims that it utilized creative means to target the US market like hosting a Grammy party in Las Vegas.
“Binance and Zhao’s fetish for secrecy and refusal to comply with regulatory requirements have made Binance a haven for dark net users, criminals, and terrorists that wish to move their assets around the globe.”
The exchange asked the court to strike out the regulators’ claims stating that the CFTC resorted to incendiary language adding that it lacks personal jurisdiction and the body failed to plead necessary elements in the anti-evasion claim.
Furthermore, the regulator failed to allege the attribute of broad trades in its domestic or foreign entities.
“Finally, Counts III, V, and VI should be dismissed on the additional ground that the Complaint fails to plead that Binance.com is a futures commission merchant,” the company added.
The recent regulatory hurdles of Binance and Coinbase have led to a downturn in trading volumes as users express skepticism over pending lawsuits.