Digital asset exchange Binance has raised concerns over the United States Commodity Futures Trading Commission (CFTC) attempting to assert its rules beyond its jurisdiction. The cryptocurrency exchange, known for being the largest by volume, argues that the US regulator is trying to monitor foreign companies that have not traded within the country.
The exchange is currently facing intense global regulatory scrutiny, particularly in light of recent high-profile departures from the firm. Observers have noted that these departures are cause for concern amidst the realities of the market.
Binance’s Legal Battle with the CFTC
In March, the CFTC filed charges against Binance, alleging that the exchange had offered derivatives products specifically targeted at the US market. Binance has consistently refuted these claims, emphasizing the distinction between its primary entity and its US counterpart, Binance.US. The exchange explicitly states that it does not operate within the US market.
“U.S. law governs domestically but does not control the world. Congress did not make the CFTC the world’s derivatives police,” the company stated in a recent filing.
Additionally, Binance.US is facing similar regulatory challenges from the Securities and Exchange Commission (SEC). The SEC’s lawsuit, filed in June, accuses the exchange of offering trading services related to unregistered securities, commingling user assets, and improper registrations.
In response, Binance argues that it has not violated any local laws as it was not involved in the alleged activities. However, the regulator claims that the exchange used various creative means to target the US market, such as hosting a Grammy party in Las Vegas.
Binance has requested the court to dismiss the regulators’ claims, stating that the CFTC has used inflammatory language, lacks personal jurisdiction, and failed to provide necessary elements in its anti-evasion claim. The exchange also highlights that the regulator has not alleged widespread trades within its domestic or foreign entities.
“Finally, Counts III, V, and VI should be dismissed on the additional ground that the Complaint fails to plead that Binance.com is a futures commission merchant,” the company added.
Impact on Trading Volumes
The regulatory hurdles faced by Binance, as well as other exchanges like Coinbase, have resulted in a decline in trading volumes. Users express skepticism due to the pending lawsuits, causing uncertainty in the market.
