Binance, one of the largest cryptocurrency exchanges in the world, has launched a legal defense against the charges filed by the U.S. Commodity Futures Trading Commission (CFTC). The exchange asserts that the regulator acted outside its jurisdiction and failed to establish personal jurisdiction over the defendants. In response, Binance has called for the dismissal of the case on multiple grounds.
Binance argues that the CFTC lacks the authority to bring charges against the exchange and its CEO, Changpeng ‘CZ’ Zhao. The court filing highlights that Binance does not operate in the United States and Zhao does not reside there. As a result, the CFTC’s complaint should be dismissed since it has failed to establish personal jurisdiction.
The exchange further criticizes the CFTC for lumping together various Binance entities without distinguishing their separate roles. Instead of recognizing the distinct functions of each entity, the regulator inaccurately referred to all foreign entities as “Binance.” Binance argues that this failure to differentiate undermines the CFTC’s case against each named defendant and weakens their ability to establish personal jurisdiction over them.
Binance also challenges the CFTC’s authority over spot trading activities, both within and outside the United States. The exchange emphasizes that the agency lacks regulatory power over spot trading, even domestically. Therefore, Binance maintains that the charges brought against them under this count should be dismissed.
Addressing the seventh count, Binance criticizes the CFTC’s attempt to apply a provision of the Commodity Exchange Act (CEA) and its regulations that have never been used before. The exchange argues that the CFTC is testing this “antievasion claim” for the first time against a new and innovative industry. Binance asserts that the CFTC is stretching the interpretation of the law by alleging violations against products that did not exist when the regulation was promulgated in 2012.
Binance firmly states that the court should dismiss the entire case due to the CFTC’s failures. The exchange argues that the regulator failed to establish jurisdiction over the defendants, lacked the authority to enforce the provisions cited in the complaint extraterritorially, and did not plead essential elements of its claims. Binance maintains that it is not subject to the CFTC’s jurisdiction and should not be held liable for the alleged violations.
Binance’s legal defense against the charges brought by the CFTC highlights the jurisdictional issues and deficiencies in the regulator’s case. The exchange firmly contends that it is not subject to the CFTC’s authority and calls for the dismissal of the entire case. As the legal battle unfolds, the outcome will have far-reaching implications for the regulation of cryptocurrency exchanges and the enforcement of derivatives laws.
