Evidently, Binance, the prominent crypto exchange, is displaying exceptional resistance against the U.S. Commodity Futures Trading Commission (CFTC). Binance argues that the CFTC is overstepping the mark and venturing beyond its jurisdiction by targeting a non-U.S. operating platform and its CEO, Changpeng “CZ” Zhao, who is also outside the geographical constraints of the U.S.
In its attempt to discard the regulator’s case, Binance underlines that the initial six charges by the CFTC “do not apply to the foreign conduct alleged here”. They thus perceive these charges as lacking the necessary support of legal norms and statutory requirements. Binance also challenges the seventh charge, asserting the accusations of evading the Commodity Exchange Act to be ineligible as the agency itself fails to meet the prerequisites.
While the CFTC holds no regulatory authority over spot trading, either domestically or overseas, a more significant issue manifests itself. The point pertains to whether Binance came under the scope of registration and regulatory compliance provisions of the Commodity Exchange Act (“CEA”) and CFTC regulations when it started offering additional products in or after 2019. This occurred at the same period it began limiting and pushing away potential U.S. users. The answer is inconclusive, and the CFTC seems to come up short in its case, regardless of their extensive investigation and over 236 paragraphs of allegations.
The key accusation against the crypto exchange, alleged back in March, was concerning the provision of unregistered derivatives products within the U.S – including cryptocurrency trading services and futures and options products. Additionally, Binance faced criticism for inadequate supervision of its business, an allegedly weak know-your-customer, or anti-money laundering program, and non-compliance in registering as a futures commissions merchant, designated contract market, or swap execution facility.
Nevertheless, the U.S. Securities and Exchange Commission (SEC) has added to Binance’s legal complications by filing a lawsuit last month. Despite these pressures, the discerning eyes of crypto enthusiasts worldwide are on Binance as it boldly fends off these critiques. Regardless of the outcome, this clash between Binance and CFTC undeniably evokes contemplation over matters of jurisdiction within cryptocurrency exchanges.
Source: Coindesk
