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Binance's Ongoing Battle Against the 'Incendiary' CFTC Suit

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Oct 26, 2023 at 03:08 pm

In the midst of escalating regulatory pressure, Binance has once again launched a vigorous defense against the allegations brought forth by U.S. commodity regulators. The world's largest cryptocurrency exchange finds itself increasingly in the crosshairs of enforcement agencies.

Binance asserts that the Commodity Futures Trading Commission (CFTC) is attempting to assert its jurisdiction beyond U.S. borders by taking action against a company that, at least on the surface, has strived to distance itself from U.S. business activities.

In a legal filing submitted by Binance to an Illinois court on Monday, the exchange accuses the CFTC of employing new and expansive arguments that could potentially grant it the authority to regulate any cryptocurrency-related activity associated with derivatives products worldwide. Binance's filing emphasizes that while U.S. law governs activities within the country's borders, it does not possess the authority to dictate global regulations. Binance contends that Congress did not appoint the CFTC as the global overseer of derivatives activities.

Furthermore, Binance's legal response highlights that the CFTC's complaint employs "incendiary language" against both Binance and its founder, Zhao Changpeng.

The conflict between Binance and the CFTC initially emerged in March when the CFTC accused the exchange of knowingly offering unregistered crypto derivatives. A subsequent filing on September 22 by the CFTC claimed that Zhao Changpeng had deliberately targeted the U.S. market and argued that U.S. commodities law explicitly covers foreign conduct.

The September filing further alleged that Binance had consistently adopted a lax approach, accommodating U.S. customers through "creative means." The regulator cited examples such as a Binance-hosted Grammy party in Las Vegas. The CFTC also criticized Binance for its penchant for secrecy and non-compliance with regulatory standards, asserting that these factors had made the exchange an attractive option for darknet users, criminals, and terrorists seeking to facilitate the movement of their assets globally.

Binance maintains that its U.S. domestic operations are managed by a distinct entity, Binance.US. Both Binance and Binance.US are concurrently attempting to dismiss a lawsuit initiated by another federal regulator, the Securities and Exchange Commission. Additionally, there have been rumors circulating regarding a potential investigation by the Department of Justice.

Read more: Israeli Police, Assisted by Binance, Freeze Crypto Accounts Tied to Hamas, Reports Say

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