In a recent legal tussle, Binance, a prominent digital asset exchange, contends that the United States Commodity Futures Trading Commission (CFTC) is endeavoring to apply its regulations on a global scale. The largest cryptocurrency exchange by trading volume argues in a court filing that the US regulator is attempting to oversee foreign companies that haven’t engaged in transactions within the United States under its jurisdiction.
The court filing by Binance emphasized the deficiencies in the Complaint, asserting that the CFTC’s efforts to extend its jurisdiction are baseless. They state, “The agency seeks in this action to regulate foreign individuals and corporations that reside and operate outside the United States…”
This dispute comes at a time when Binance is grappling with heightened regulatory scrutiny, resulting in the departure of notable figures from the company, which has raised concerns within the industry. In March, the CFTC filed charges against Binance for allegedly offering derivative products targeting the US market, a claim firmly denied by the company.
Binance has been keen to differentiate itself from the US-based Binance.US, highlighting that it does not operate within the US market. They underline the fact that while US law has jurisdiction domestically, it cannot dictate global standards, stating, “U.S. law governs domestically but does not control the world. Congress did not make the CFTC the world’s derivatives police.”
Binance.US also confronts similar regulatory challenges from the Securities and Exchange Commission (SEC) after a lawsuit in June accused the exchange of providing trading services involving unregistered securities, mingling user assets, and failing to register properly.
In response to the legal action, Binance argues that it did not violate local laws as it was not involved in the alleged activities. The regulator, on the other hand, contends that Binance used creative methods to target the US market, such as hosting a Grammy party in Las Vegas. The filing also claims that Binance’s secretive nature and reluctance to comply with regulatory requirements have made it attractive to dark net users, criminals, and individuals seeking to move assets globally.
Binance has petitioned the court to dismiss the regulator’s claims, asserting that the CFTC resorted to inflammatory language, lacks personal jurisdiction, and failed to provide essential elements in the anti-evasion claim. Moreover, the regulator did not allege the scope of trades conducted by Binance.com in its domestic or foreign entities.
The recent regulatory challenges faced by Binance and Coinbase have led to a decline in trading volumes, with users expressing skepticism due to pending lawsuits.