Binance, the largest cryptocurrency exchange in the world, has filed a statement in support of its motion to dismiss the lawsuit that the Commodity Futures Trading Commission (CFTC) filed against it in March. The crypto exchange and its CEO and founder, Changpeng Zhao (CZ), filed a motion to dismiss the lawsuit in July.
In an Oct. 23 filing in the U.S. District Court for the Northern District of Illinois, Binance and CZ said that the CFTC is attempting to regulate foreign people and businesses that operate outside of the U.S., despite the fact that the CFTC only has authority within the U.S., according to a copy of the document. Binance asked the Court to dismiss the lawsuit because "Congress did not make the CFTC the world’s derivatives police."
The court filing said that the CFTC is relying on broad arguments that would enable it to regulate any crypto-related derivatives product anywhere in the world. Binance argued that the CFTC has attempted to create a new definition of "U.S. person" that would essentially remove any limitations on its geographical authority. Binance noted that although the CFTC has used "incendiary language" about CZ, it has not alleged that Binance users have experienced any harm. Instead, the document said, the lawsuit hinges on an alleged failure to meet certain registration requirements.
Binance argued that the CFTC's complaint should be dismissed for multiple reasons. First, the court filing said the CFTC "lacks personal jurisdiction." Second, several of the claims are "impermissibly extraterritorial." Additionally, Binance said the CFTC did not provide any evidence to support numerous claims it made. The filing noted that several of the CFTC's allegations are "entirely premised" on the notion that Binance.com is a futures commission merchant, which Binance said that the CFTC has not alleged.
Binance asked the Court to dismiss the CFTC's lawsuit with prejudice and said that failure to do so would give the CFTC "worldwide regulatory reach."
Earlier this month, CFTC Chair Rostin Behnam highlighted the absence of a comprehensive regulatory framework for digital assets and called on Congress to legislate one, CryptoSlate reported. Behnam said during the Futures Industry Association Expo 2023 on Oct. 2 that he believes many digital assets are commodities, and the CFTC should have expanded authority over them.