No ‘immediate path forward’: CFTC is talking to Binance after launching legal action, official says
No immediate path forward in CFTC's case against Binance: CFTC's Johnson
A Commodity Futures Trading Commission official said Tuesday that she hopes to find a "path forward" in the regulator's legal battle with crypto exchange Binance, noting that no decision has been taken yet on whether to settle the case or take it to court.
Kristin N. Johnson, commissioner at the CFTC, said that the regulator has been in conversations with Binance to address its concerns about the company's conduct.
The CFTC sued Binance, its CEO Changpeng Zhao and its former chief compliance officer last month, alleging the platform solicited users in the U.S. through its platform and allowed them to trade derivatives despite not being authorized to do so.
Binance said it would stop operating in the U.S. in 2019.
"I want to be really careful not to prejudge what will actually happen in the litigation. And I want to say that typically, in the context of any litigation, we are always ready to have conversations and typically even ahead of the litigation," Johnson said in an interview with CNBC's Arjun Kharpal Tuesday.
"We've been in continuing conversations with the business to describe what we understand is potentially problematic conduct and to give them an opportunity to explain that conduct and to help us find a path forward."
"As of the moment, we can conclude that there is not an immediate path forward," she added. "That doesn't mean there couldn't be one and hopefully there will be one."
Her comments mark a rare statement on the Binance suit to media since the CFTC first announced it was suing the company on Mar. 27.
Binance was not immediately available when contacted by CNBC. In a blog post following the complaint's filing, Zhao disagreed with the CFTC's findings and said the exchange was "committed to transparency and cooperation with regulators and law enforcement" in the U.S. and globally.
The Binance group, unlike its U.S. affiliate Binance.US, isn't regulated in the U.S. The company has frequently faced criticism for operating in various jurisdictions -- including the U.K., Italy and Singapore -- without approval.
Crypto companies have faced tougher scrutiny in the U.S. lately in the wake of the $32 billion flameout of crypto exchange FTX and a slew of other industry collapses and a plunge in prices which caused hefty losses for investors.
On Monday, Coinbase filed suit against the U.S. Securities and Exchange Commission -- making good on a vow made by CEO Brian Armstrong last week to take the regulator to court. Coinbase suggested the regulator should be forced to clarify whether it would allow the crypto industry to be regulated under existing securities laws.
Johnson said she hopes that Congress will step in to introduce crypto-specific rules soon.
The crypto industry is still largely unregulated, however calls for it to be brought within the regulatory fold have grown following recent blowups in the space like the implosion of crypto exchange FTX and stablecoin firm Terra.
"I do think that we'll have to be really careful to have dynamic regulation that is not just responsive to the asset classes that we see in the market today but that gives us the flexibility and capability to respond as entrepreneurs and innovators, coders and developers of software protocols continue to release more and more interesting asset classes and products and financial markets," she said.
"Under immediately existing laws, there is provision to understand how securities laws would apply to any digital assets that qualify as securities. And those the same in the context of commodities," Johnson said.
"However," she added, "it is imperative that Congress step up and make plain what their preference is in terms of how to deal with the spot market oversight. I think that's the singular space, if we went very narrow, specifically to your uncertainty point, that spot market oversight, that definitional piece is very critical. And I think it's helpful for us if Congress assist us and giving us that guidance."
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