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Binance, along with founder Changpeng Zhao and associated companies, plan to file a motion to dismiss a March lawsuit filed by the US Commodity Futures Trading Commission (CFTC).
According to documents filed Monday, their motion for dismissal — due by Thursday — will come in excess of a 15-page limit allowed by default, so they’ve requested permission to lodge a longer document.
The CFTC alleges that Binance has conducted commodity derivatives transactions on behalf of individuals in the US since July 2019.
Binance and top executives, including former chief compliance officer Samuel Lin, deliberately ignored regulations to hide its operations, the regulator has claimed.
The foreign Binance entities along with CEO Zhao intend to jointly submit their dismissal motion, while Lim intends to file a separate motion, per the document. Lim also intends to join portions of the motion put forth by the foreign Binance entities and Zhao.
“Defendants’ alleged willful evasion of US law is at the core of the Commission’s complaint against Binance,” said Gretchen Lowe, CFTC’s enforcement division chief counsel in March. “The defendants’ own emails and chats reflect that Binance’s compliance efforts have been a sham and Binance deliberately chose — over and over — to place profits over following the law.”
Zhao initially responded to the allegations in a blog post, claiming that the lawsuit contains an “incomplete recitation of facts” and refuted the “characterization of many of the issues alleged in the complaint.”
Binance.US volume dwindles amid CFTC, SEC lawsuits
The holding company behind Binance is registered to the Cayman Islands but the exchange reportedly claims to have no official headquarters.
Binance still maintains a US-centric operation, Binance.US, however that platform doesn’t offer derivatives such as perpetual futures contracts, or margin trading. Binance.US has struggled to maintain banking partners following recent cases filed by US agencies.
Binance’s US exchange processes a fraction of the trade volume reported by the global platform — just $11.5 million over the past day compared to $7.1 billion, according to CoinGecko. Binance.US saw upwards of $100 million per day at the start of the year.
The CFTC’s lawsuit referred to offhand internal dialogues which discuss ways US-based users can skirt Binance’s standard customer identification processes (KYC), allowing them access to the flagship exchange.
The SEC’s separate lawsuit alleges multiple securities law breaches including unregistered sales, customer fund commingling, operating as an unregistered exchange and wash trading.
David Canellis contributed reporting.