KEY POINTS
- The CFTC filed a lawsuit against Binance over allegations of regulatory violations in March
- Binance Holdings and Binance (Services) Holdings are the two Irish units included in CFTC’s case
- “It is designed to obscure the ownership, control and location of the Binance platform,” the commission said
Binance, the world’s largest centralized crypto exchange platform by trading volume, has urged the Illinois court to drop a lawsuit filed by the U.S. Commodity Futures Trading Commission against it. The exchange accused the CFTC of trying to use a “trojan horse” to make itself function as a de facto global crypto police.
“The CFTC relies on new and broad arguments that would allow it to regulate any activity in cryptocurrency (or other assets) related to a derivatives product anywhere on the globe,” Binance said in a court filing Monday.
“U.S. law governs domestically but does not control the world. Congress did not make the CFTC the world’s derivatives police,” it noted, adding that the CFTC’s complaint “resorts to incendiary language” against the exchange and its founder and CEO Changpeng Zhao (CZ).
In its court filing, Binance’s lawyers argued the Irish units of the business should not be named as defendants in the lawsuit as they were located outside of the jurisdiction of the CFTC.
Binance Holdings and Binance (Services) Holdings are the two Irish units of the crypto firm that were included in the commission’s case.
Binance said the court should “reject the agency’s effort to expand its territorial reach beyond what is permitted by the law.”
The CFTC has alleged that CZ and Binance knowingly disregarded provisions of the U.S. Commodity Exchange Act (CEA) and engaged in a calculated strategy of regulatory arbitrage to benefit commercially.
“Binance’s reliance on a maze of corporate entities to operate the Binance platform is deliberate,” the U.S. watchdog earlier claimed, adding that “It is designed to obscure the ownership, control and location of the Binance platform.”
“The agency seeks in this action to regulate foreign individuals and corporations that reside and operate outside the United States while ignoring the carefully delineated provisions in the Commodity Exchange Act setting forth narrow exceptions to the fundamental legal principle that US law governs domestically but does not control the world,” Binance’s lawyers said.
They argued the court “should reject the CFTC’s effort to use its attack on the non-U.S. defendants in this case as a Trojan horse in order to achieve worldwide regulatory reach – which would have consequences far beyond this case and not intended by the U.S. Congress.”
The CFTC filed a lawsuit against Binance over allegations of regulatory violations in March.
