Binance asks court to dismiss CFTC’s crypto lawsuit

NEW YORK – Binance Holdings, operator of the world’s largest crypto exchange, and its co-founder Zhao Changpeng asked a US federal judge to dismiss

a lawsuit filed by the Commodity Futures Trading Commission (CFTC).

Attorneys for Binance and Mr Zhao – also known as CZ – submitted the motion on Thursday, arguing the regulator is overreaching and using theories relying on inconsistencies while also making unsound claims and irrelevant allegations.

“In this case, the CFTC seeks to regulate foreign individuals and corporations that reside and operate outside the United States – outstripping the limits of its statutory authority and treading on deep-rooted principles of comity with foreign sovereigns,” they wrote in the filing.

The CFTC sued the company and Mr Zhao in March, alleging they took intentional steps to evade US laws – including deliberately allowing Americans to use the platform to buy and sell crypto derivatives despite Binance never registering.

The agency also sued Mr Samuel Lim, Binance’s former chief compliance officer, who also filed a motion to dismiss on Thursday.

Binance and its chief executive officer Zhao have been fielding growing regulatory pressure around the world, emblematic of a clampdown on crypto after a rout in the market in 2022 that triggered a series of major blow-ups.

While the platform remains dominant in crypto markets, its share of spot digital-asset trading volumes has declined in recent months.

Earlier in July, billionaire Zhao sought to counter concerns about Binance’s outlook following the exits of executives who had been helping to navigate the regulatory crisis.

Mr Zhao has previously said that the CFTC’s complaint “appears to contain an incomplete recitation of facts” and that he did not agree with “the characterisation of many of the issues alleged in the complaint”.

Binance declined to comment further on Thursday’s submission. The CFTC did not immediately return a request for comment.

The 49-page motion states that Mr Zhao is not under US jurisdiction, because he resides in the United Arab Emirates.

“The CFTC’s failure to include allegations sufficient to establish personal jurisdiction requires dismissal,” the defendants’ lawyers wrote in the filing.

The motion claims that two incidents in which Mr Zhao allegedly interacted by e-mail with potential US users occurred “more than a year before Binance.com ever began offering the alleged derivatives products at issue”.

US regulators have said that Binance.com made it easy for American users to get onto the platform.

The US Securities and Exchange Commission in June accused Binance and Mr Zhao of mishandling customer funds, misleading investors and regulators, and breaking securities rules.

Binance has said that it intends to defend its platform “vigorously”. BLOOMBERG