International crypto giant Binance has asked a federal judge to dismiss charges brought against the firm by the Commodity Futures Trading Commission.
In motions filed late Thursday, Binance and former chief compliance officer Samuel Lim claimed that the CFTC did not have jurisdiction for several of the charges it levied against the company, principal owner and CEO Changpeng 'CZ' Zhao and Lim in a March enforcement action.
"What little the complaint says about Mr. Lim relates to things he is supposed to have done or failed to do abroad," a 17 page memorandum in support of Lim's motion to dismiss reads. "None of those allegations make the necessary link between Mr. Lim, this country, and this case."
Binance also claims that some of the charges brought against the company by the CFTC are "impermissibly extraterritorial" because the main company is not based in the U.S.
The civil case, brought in March, largely revolves around allegations that Binance’s main trading platform knowingly operated in the U.S. illegally, as well as accusing the company of allowing other types of illegal transactions to happen on its platform. The motion to dismiss is a standard tactic by defendants in cases brought against them in the U.S., and occasionally results in charges being dropped over technical issues.
In addition to monetary penalties the suit could effectively ban the company and its executives from doing business in the U.S., which could further disrupt Binance US operations. Binance US, as well as Binance and CEO Changpeng ‘CZ’ Zhao, is also the target of a Securities and Exchange Commission enforcement action. Both suits use an unusual amount of internal communication obtained by regulators to support their allegations, including an exchange between Binance executives in the CFTC’s initial complaint that appears to show them facilitating transactions by the Palestinian group Hamas, a sanctioned terrorist organization in the U.S.
Among other issues, the SEC accuses Binance and Binance US of redirecting billions in customers assets in a manner similar to how rival executive Sam Bankman-Fried and his trading platform FTX are accused of misappropriating billions of customer funds.
The CFTC's case against Binance is in the U.S. District Court for Northern District of Illinois. An initial hearing was scheduled for Thursday but the judge waived the need for that hearing due to the filings presented by both sides in the case.
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
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