They filed a motion to dismiss the CFTC’s case and are claiming that the agency is attempting to regulate foreign individuals and corporations residing and operating outside the United States, Reuters reported Friday (July 28).
The CFTC sued Binance, Zhao and former Chief Compliance Officer Samuel Lim in March claiming that the exchange was operating in violation of the Commodity Exchange Act and related regulations, describing it as an “illegal” exchange and a “sham” compliance program.
In response, Binance, which is the world’s largest crypto exchange, argued that its holding company is based in the Cayman Islands, and CEO Zhao is a Canadian citizen, meaning the CFTC’s claims should be dropped, Reuters reported.
The CFTC has alleged that Binance offered and executed commodity derivatives transactions on behalf of U.S. persons from at least July 2019, in violation of U.S. laws, according to the report.
Binance responded that by June 2019, the exchange had begun implementing steps to restrict and off-board potential U.S. users, per the report.
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Lim has also filed a separate motion to dismiss the CFTC’s claims against him, the report said.
When the CFTC launched its lawsuits in March, CFTC Chairman Rostin Behnam said in a press release: “For years, Binance knew they were violating CFTC rules, working actively to keep the money flowing and avoid compliance. This should be a warning to anyone in the digital asset world that the CFTC will not tolerate willful avoidance of U.S. law.”
Binance said at the time in a statement to PYMNTS that it found the CFTC’s filing “unexpected and disappointing” and noted that it had been working with the commission for two years.
“Nevertheless, we intend to continue to collaborate with regulators in the U.S. and around the world,” Binance said in the statement.
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