Regulation
Binance CEO and Former Exec Line Up Motions to Dismiss CFTC Complaint
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Binance and its founder Changpeng Zhao are planning to seek dismissal of the complaint brought against the exchange by the Commodity Futures Trading Commission (CFTC), a Monday court filing suggests. The US commodities regulator alleged in a prior filing to the Illinois District Court that the exchange violated various elements of the Commodity Exchange Act between July 2019 and the time it took action.
The legal dispute has, however, remained somewhat obscure since the classification of digital assets in the US is still unclear. Cryptocurrencies have not been explicitly classified as either securities or commodities. Per the Reuters report, the defendants in the CFTC complaint – the exchange, its CEO CZ and former Chief Compliance Officer Samuel Lim – intend to file separate motions to dismiss when they submit their response later this Thursday.
“The Foreign Binance Entities and Zhao intend to file a joint Motion to Dismiss the Complaint. Lim intends to file a separate Motion to Dismiss the Complaint, and join parts of the motion filed by the Foreign Binance Entities and Zhao,” a section of the Monday filing reads.
Their attorneys also requested the court for permission to exceed the page limit on the supporting briefs “given the complexity of the CFTC’s Complaint and the number of arguments Defendants anticipate making in support of their Motions to Dismiss.”
“Defendants respectfully request an expansion of the page limit allowed by Local Rule 7.1 up to 50 pages collectively for the two Memoranda of Law, which is 25 pages less than the combined total of 75 pages that the Defendants would be entitled to under Local Rule 7.1 if they each separately moved to dismiss the CFTC’s Complaint.”
Binance and CZ are separately defendants in a lawsuit brought forward by the US Securities and Exchange Commission (SEC) last month. The domestic securities regulator accused Zhao of mismanaging exchange (customer) funds and the exchange of offering securities without seeking prior registration. The SEC additionally took issue with the exchange's operations as it knowingly allowed US residents to access its international platform.
The exchange is also under investigation by the US Department of Justice, whose national security division seeks to determine whether Russians used the platform to circumvent sanctions imposed by the European Union and the US government in relation to Ukraine's invasion. The DoJ inquiry into Binance in May followed April reports of the exchange quietly lifting restrictions and resuming operation in Russia after previously halting support for deposits from Russia-issued MasterCard and Visa cards.
