Binance Takes On CFTC with Plans to Seek Dismissal of Lawsuit

Binance and its Founder and CEO, Changpeng Zhao, are planning to seek the dismissal of a case filed by the Commodity Futures Trading Commission (CFTC) in March. According to a court document filed yesterday (Monday), the crypto exchange and Zhao are expected to respond to the complaint on July 27.

The CFTC is accusing the company and its founder of violating federal regulations related to the issuance of commodities. Particularly, the regulator claims that Binance violated the Commodity Exchange Act by allegedly operating an illegal exchange lacking adequate compliance procedures.

Additional Charges

Additionally, the CFTC claims that Binance offered and facilitated transactions of commodity derivatives on behalf of users in the US against the laws. The lawsuit mentioned Samuel Lim, Binance's former Chief Compliance Officer, as a defendant in the case for allegedly abetting the violations. However, Lim reportedly plans to seek a dismissal of the charges levelled against him.

Filed before the US District Court in Illinois, the CFTC said in the lawsuit: "For years, Binance knew it was violating CFTC rules, working actively to keep the money flowing, and avoiding compliance. This should be a warning to anyone in the digital asset world that the CFTC will not tolerate willful avoidance of the US laws."

However, in a blog published on Binance's website, Zhao dismissed the CFTC's complaint, terming it 'unexpected and disappointing'. Zhao disputed the claims by the regulator that the exchange lacks proper compliance procedures, saying Binance has implemented the 'best-in-class technology for compliance'.

Binance and Zhao Face Legal Hurdles

Besides that, Binance and Zhao are facing a lawsuit filed by the Securities and Exchange Commission (SEC) in June. The regulator filed 13 charges against the exchange, two affiliated entities, and Zhao for allegedly operating an illegal trading platform, offering unregistered securities, and commingling customers' funds.

On top of that, the US Department of Justice is investigating the exchange for allegedly allowing Russians to use the platform in violation of the US sanctions following the Russian invasion of Ukraine. The DOJ's national security department is investigating the exchange for suspected anti-money laundering violations.