Binance motions to dismiss CFTC suit: US law ‘doesn’t rule the world’
Binance claims the CFTC doesn’t have the right to police its foreign entities because they’re not based in the US
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Binance moved to dismiss CFTC charges Thursday, alleging the regulator exceeded its authority by attempting to govern foreign firms and individuals outside the US.
“It is a bedrock principle of our legal order that, as a general rule, ‘US law governs domestically but does not rule the world,’” the exchange said, citing a 15-year-old lawsuit between Microsoft and AT&T.
In addition to “stretching the territorial reach of its jurisdiction,” Binance alleges the regulator has increasingly leaned on an inconsistent mix of legal theories, according to its detailed court filing.
Binance maintains these theories are based on contradictory registration categories, while accusing the CFTC of forwarding an “unsound” claim under a previously unused regulation and basing its case on allegations dismissed by the agency’s own guidelines.
The exchange argues the CFTC’s allegations don’t convincingly show that any foreign Binance entity functioned as a Futures Commission Merchant (FCM). Instead, Binance claims the CFTC portrays Binance.com as a direct-access exchange rather than a trade-executing intermediary, per the filing.
All registered FCMs must join the National Futures Association as self-regulatory bodies, enforcing CFTC-approved financial and reporting requirements. Due to their role as intermediaries between customers and the futures markets, FCMs often face more rigorous regulatory oversight to ensure customer protection.
If required to register with the CFTC, Binance would instead identify as a Designated Contract Market, Swap Execution Facility, or Foreign Board of Trade, not as an FCM, the exchange argues.
Binance is urging the US District Court for the Northern District of Illinois to dismiss the charges against its foreign entities and CEO, Changpeng Zhao. The CFTC accuses Binance of illegally facilitating commodity derivatives transactions for US individuals since July 2019.
The CFTC also alleges that Binance, along with its top executives including former Chief Compliance Officer Samuel Lin, intentionally circumvented regulations to conceal their operations.
While the parent company of Binance is registered in the Cayman Islands, the exchange states it does not have an official headquarters and has repeatedly declined to identify its operational base.
The SEC, also pursuing charges against Binance for securities violations, accuses Binance and Zhao of illicitly operating a “web of deception.” That includes failing to establish customer monitoring controls and not restricting US customers from accessing its platform, among other accusations.
The CFTC did not immediately respond. A Binance spokesperson declined to comment on the ongoing litigation.
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