• Wed. Jul 17th, 2024

Binance Pushes Back: “CFTC isn’t the World’s Derivatives Police”

Xavier Jackson

ByXavier Jackson

Oct 24, 2023

Binance, a leading cryptocurrency exchange, recently challenged the U.S. Commodity Futures Trading Commission (CFTC) in a filing, criticizing its claim to global jurisdiction over derivatives-related crypto activities.

Binance Challenges CFTC’s Global Overreach

In a recent court filing, leading crypto exchange Binance [BNB] vehemently contested the U.S. Commodity Futures Trading Commission’s (CFTC) expansive jurisdiction claims over global derivatives-related crypto operations.

The exchange pointed out, “While U.S. regulations apply within its borders, they don’t dictate global actions. It wasn’t Congress’s intention to position the CFTC as the global authority on derivatives.”

Binance’s stance suggests that the CFTC is overextending its boundaries by trying to regulate entities that intentionally operate outside the U.S. framework. Accusing the CFTC of employing “broad arguments,” Binance claims the agency aims to universally govern all derivatives-related crypto transactions.

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Furthermore, Binance urged the court to recognize the “incendiary language” that the CFTC used in its lawsuit against both the exchange and its CEO, Changpeng Zhao, popularly known as “CZ.” This filing was submitted to an Illinois court on 23 October, countering the CFTC’s previous filing in September.

CFTC Accuses Binance of Shielding Criminal Activities

In a recent court filing, the U.S. Commodity Futures Trading Commission (CFTC) sharply criticized crypto giant Binance, alleging that its leadership and operational practices have turned the platform into a refuge for illicit activities.

The CFTC specifically claimed that Binance’s CEO, Changpeng Zhao, or CZ, had “intentionally targeted” the U.S. market, even though U.S. commodities laws govern foreign activities.

The document intensifies its claims by suggesting, “Binance, along with Zhao’s predilection for confidentiality and non-compliance with regulations, has made the platform a preferred hub for those in the dark net, as well as individuals with malicious intent, seeking to move assets internationally.”

This isn’t the first time the CFTC has made such assertions. The agency initially sued Binance in March, charging the exchange with willfully offering unregistered crypto derivatives products within the U.S., which is a clear violation of federal law.

Additionally, the CFTC highlighted that Binance’s then-compliance officer, Samuel Lim (2018-2022), was allegedly informed of the Gaza-based group, Hamas, carrying out transactions on the platform back in February 2019.

Following a recent terror attack attributed to Hamas, Binance collaborated with Israeli officials to suspend multiple accounts suspected of being linked to the group. Israeli authorities had, in May 2022, already taken measures against nearly 190 cryptocurrency accounts on Binance, many of which were purportedly connected to Hamas.

Binance Derivatives Trading Unfazed by CFTC Scrutiny

According to their findings, before the CFTC lawsuit in March, Binance’s perpetual futures trading made up a substantial 45% of its daily average volume. Although there was a noticeable dip post the regulatory action, the exchange has since rebounded. Currently, Binance’s perpetual futures trading stands at an impressive 46% of its daily average volume.

Xavier Jackson

Xavier Jackson

Xavier Jackson is a talented and versatile news writer with a knack for delivering compelling stories. With a dedication to accurate reporting and a captivating writing style, his articles provide readers with insightful and thought-provoking perspectives on current events.

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