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The largest crypto exchange, Binance, and CZ, the company’s CEO, is planning to file a motion to dismiss the CFTC charges filed in March 2023 that accused the exchange and its executives of various US commodities and compliance law violations.
According to a July 24th court filing in an Illinois District Court, Changpeng Zhao, a.k.a CZ, and former chief compliance officer Samuel Lim plan to file two separate motions to dismiss the complaint before July 27th.
Binance and CZ filed a license application with the U.S. District Court for the Northern District of Illinois, planning to file a legal memorandum to initiate a motion to dismiss the lawsuit filed by the U.S. Commodity Futures Trading Commission (CFTC). Earlier, the U.S. CFTC…
— Wu Blockchain (@WuBlockchain) July 25, 2023
CZ and Samuel Lim to File Separate Motions
Per the filing, three foreign Binance entities Binance Holdings Ltd., Binance Holdings (IE) Ltd., Binance (Services) Holdings, Ltd., CZ, and Samuel Lim, have planned to file a joint motion. Samuel Lim also intends to file a separate motion to dismiss the CFTC complaint. The filing reads:
“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.”
As reported, the CFTC sued Binance and its executives in March 2023 for alleged violations of federal regulations and the Commodities Exchange Act. CFTC said that the company operated an unregistered derivatives exchange in the US, and both CZ and Samuel Lim willfully operated a “sham” compliance program to assist users in getting around the platform’s access restrictions.
Binance’s response to the CFTC complaint is due on July 27th. The filing also seeks permission to exceed a 15-page limit to up to 50 pages for this response to accommodate the intended motions. The defendants cited the complexity of the lawsuit brought against them by the CFTC as a reason to seek a 50-page limit on the brief, which would be used to support its motion.
“Defendants endeavored to comply with the page limit of Local Rule 7.1. But given the complexity of the CFTC’s Complaint and the number of arguments Defendants anticipate making in support of their Motions to Dismiss, Defendants anticipate that their Memoranda of Law in support of the two motions will exceed the fifteen-page limits.”
Binance, the largest cryptocurrency exchange by trading volume, is also engaged in a legal dual with the most infamous regulatory agency in the United States for the crypto sector, SEC. In June 5th lawsuit, SEC said that Binance sold unregistered securities, allowed US customers to use its global platform, and claimed Zhao misused customer funds.
Earlier, Binance was able to continue breathing in the US after it reached a deal with SEC that sought to freeze Binance US assets.
A New FUD
A new FUD around Binance emerged on Monday when a WSJ report, citing an internal memo, claimed that some initial trades on Binance US in 2019 were conducted internally and constituted wash trading. The report also claims that the ongoing SEC case also accuses the exchange of wash trading.
According to the report, Binance US saw $70,000 worth of Bitcoin trading over its first hour of operations in 2019. However, they were conducted by the Binance team itself.
CZ didn’t directly respond to the report but reposted an old article about FUD, indicating he disagreed with the report.
Also from 6 years ago, an article I wrote on FUD. Yes, it's a time-old concept. It hasn't changed. And sadly, it will go on for a while.https://t.co/3DoSqDhNHo
— CZ 🔶 Binance (@cz_binance) July 24, 2023