The largest crypto exchange, Binance, and its CEO, Changpeng Zhao, have officially submitted a request for dismissing the lawsuit that was brought forward by the Commodity Futures Trading Commission (CFTC).
On July 27th, Binance submitted the motion in which it accused the US commodities regulator of overstepping its boundaries and for regulatory overreach.
It was in March that the lawsuit had first been filed by the CFTC against Binance in which the crypto exchange had been accused of offering unregistered derivatives products in the country.
This includes options and futures products, along with crypto trading services.
The regulator also alleged that the company had inadequate supervision and had not registered as a designated contract market, futures commissions merchant, or swap execution facility.
The CFTC also claimed that the AML and KYC program of the crypto exchange was not robust enough.
In the introduction of its filing, Binance cited the case between Microsoft Corp and AT&T Corp that took place in 2007.
The lawyers of the exchange said that the US law does apply domestically, but they are not applicable all over the world.
The company said that the CFTC was making conclusory allegations for regulating the overseas activities of individuals and foreign corporations.
The filing further said that the agency could not establish any jurisdiction over the defendants and the provisions mentioned in the lawsuit cannot be enforced extraterritorially.
The parent company of the Binance crypto exchange is based in the Cayman Islands, but the exchange has mentioned that there are no official headquarters.
In addition, Binance has never identified its operational base. But, a spokesperson for the company also refused to comment on the litigation.
There are five different types of arguments that have been made by Binance in the filing it recently submitted.
First and foremost, the company argues that the CFTC cannot sue Binance because it cannot prove that the exchange or its chief executive can be subjected to personal jurisdiction in the country.
The filing said that the group pleading has been used in the complaint and the contacts of each defendant with the United States have not been assessed.
The second argument that Binance has put forward is that of extraterritoriality, in which it said that the CFTC could not prove that any domestic transactions had been conducted by the defendants.
In its other arguments, Binance stated that the complaint of the CFTC does not clarify that Binance.com functions as a counterparty or an intermediary.
It further added that the regulatory body cannot prove that the defendants were operating as a foreign or domestic board of trade.
The last argument that Binance presented was the outright dismissal of the claims of the CFTC about the company evading the Commodity Exchange Act (CEA).
According to Binance, the said regulation had been introduced back in 2012 and the crypto industry and its products did not exist at the time, so the anti-evasion claims cannot apply in this scenario.
The exchange also said that authorities have also not provided appropriate guidance, an argument that Coinbase has also presented in its own legal matters.