Binance Files Intent to Dismiss CFTC Complaint

The world’s largest crypto exchange plans to ask the court to dismiss a lawsuit filed by the Commodity Futures Trading Commission (CFTC) in March this year.

In a filing made to an Illinois District Court yesterday, multiple Binance entities, along with CEO Changpeng Zhao and former Chief Compliance Officer Samuel Lim, stated their intention to file two separate motions seeking the dismissal of the recent CFTC complaint.

“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,” the filing reads.

The deadline for filing these motions to dismiss is set before July 27.

Binance has also requested permission to exceed the standard 15-page limit on the brief that the exchange will use to support the motions for the dismissal. Instead, Binance seeks to submit a 50-page brief, citing “the complexity of the CFTC’s Complaint and the number of arguments Defendants anticipate making in support of their Motions to Dismiss.”

While the filing did not specify the defendants’ argument, the motions to dismiss could possibly challenge the basis and validity of the CFTC’s allegations against Binance, Zhao, and Lim.

A CFTC spokesperson told Decrypt it “declines to comment on this matter.” Binance declined to comment before the motions are filed.

Binance under regulatory pressure

Filed in March this year, the CFTC’s lawsuit accuses Binance of violating the Commodity Exchange Act and certain related federal regulations.

The CFTC’s claim is based on the assertion that Binance has been facilitating commodity derivatives transactions on behalf of individuals in the United States since at least July 2019, which the regulator deems to be in violation of U.S. laws.

Additionally, the CFTC asserts Binance failed to adequately supervise activity on its trading platform. The exchange, the world’s largest in terms of trading volume, is also accused of insufficient anti-money laundering (AML) and know-your-customer (KYC) controls, knowingly evading or helping U.S. clients evade regulators, and trading against its own customers.

Responding to the claims, a Binance spokesperson told Decrypt at that time “the complaint filed by the CFTC is unexpected and disappointing as we have been working collaboratively with the CFTC for more than two years.”

Separately, both Binance and its American subsidiary are facing a lawsuit from the U.S. Securities and Exchange Commission (SEC) alleging that CEO Changpeng Zhao commingled customer funds through a “web of deceit.”

Binance is also under investigation by the Department of Justice for suspected money laundering and sanctions violations, and the Internal Revenue Service.