Crypto exchange giant Binance and its CEO, Changpeng “CZ” Zhao, are set to face a legal challenge raised by the United States commodity regulator. In a recent filing with the Illinois District Court on July 24, various entities Binance, Zhao, and former chief compliance officer Samuel Lim announced their intention to file a motion to dismiss the complaint filed in March before the July 27 deadline.
“Foreign Binance Entities and Zhao intend to file a joint Motion to Refuse the Complaint. Lim intends to file a separate Motion to Deny the Complaint, and joins the portions of motions filed by Binance Foreign Entities and Zhao,” the filing clarifies.
In addition, Binance is also seeking permission to expand its usual 15-page limit. The exchange wanted it to be up to 50 pages long, citing the complicated nature of the lawsuit against them. This shows the importance of the case and the comprehensive arguments they are planning to support their motion to dismiss.
The Commodity Futures Trading Commission (CFTC) had previously filed a lawsuit against Binance and Zhao in March, alleging the crypto exchange failed to properly register with regulators. The CFTC alleges that although Binance has blocked US residents from using its platform, they knowingly made transactions in various cryptocurrencies for US-based individuals since 2019, thereby knowingly violating US laws.
As a result, regulators have further accused Binance of running a “sham” compliance process and intentionally conducting activities outside the US to avoid compliance with US regulations. These allegations put Binance under intense scrutiny and raised questions about its compliance with regulatory guidelines.
However, Binance’s troubles don’t stop there. The Securities and Exchange Commission (SEC) joined the legal fray on June 5, suing Binance and Zhao. The SEC alleged that Binance sold unlisted securities, allowed US customers to use its global platform, and accused Zhao of misusing customer funds,
In a damning statement, the SEC presented evidence from Binance’s head of compliance, likely Lim, admitting in a message to other officers that they “operate as a fake unlicensed stock exchange in the US bro.”
Additionally, recent reports indicate that the US Department of Justice is investigating Binance for allowing Russians to use its platform in violation of US sanctions, adding further complications to the exchange’s legal battle.
Binance and CZ Zhao faced multiple legal challenges and are determined to put up a strong defense. However, the outcome of these lawsuits will have a significant impact on the future of the crypto exchange industry and could set an important precedent for regulatory compliance. The crypto world is eagerly awaiting the court’s decision.