U.S. Supreme Court Allows Binance Class Action Lawsuit to Proceed

Highlights:

• U.S. Supreme Court allows class action lawsuit against Binance to proceed over unregistered token sales.
• Binance faces claims of selling risky digital tokens without proper warnings to U.S. investors.
• SEC labels Binance a fraud while the platform battles multiple lawsuits in global courts.

The U.S. Supreme Court has declined to stop a class action lawsuit against crypto exchange Binance. The case can now proceed in the lower courts. The lawsuit was filed by investors who allege Binance sold unregistered digital tokens. 

🚨BREAKING: 🇺🇸 U.S. Supreme Court Rejects Binance and CZ’s Appeal in Unregistered Token Lawsuit👩‍⚖️👇

Court says U.S. securities laws apply as token sales were finalized in the U.S. 🇺🇸 pic.twitter.com/MVFUnbp9nK

— Pushpendra Singh Digital (@PushpendraTech) January 14, 2025

The lawsuit involves tokens such as ELF, EOS, FUN, ICX, OMG, QSP, and TRX. Investors blame Binance for failing to curb the risks of these tokens and warn investors. They claim they lost money because of these risks and want back their investments.

Binance contested the lawsuit, claiming that U.S. securities laws should not apply to its operations. The exchange said it does not have a physical headquarters in the United States. Binance also pointed to a 2010 Supreme Court ruling limiting the use of U.S. securities laws to foreign companies.

The 2nd U.S. Circuit Court of Appeals in Manhattan dismissed Binance in its ruling. Investors utilized U.S. servers, thus the court concluded that the transactions took place in the United States. The court, based on this ruling, said that U.S. securities laws can be applied to Binance’s operations.

Investors Accuse Binance of Selling Unregistered Tokens Without Risk Disclosure

The lawsuit alleges Binance sold digital assets to U.S. investors without properly registering them. It also accuses Binance of not disclosing the risks associated with such investments.

Binance appealed the decision to the U.S. Supreme Court and lost. The exchange contended that the 2nd Circuit Court misinterpreted a key legal precedent. It said the United States improperly extended its securities laws in this case.

This is yet another lawsuit that Binance is facing. The company previously settled with the U.S. Department of Justice for $4.3 billion. They admitted to violating anti-money laundering and sanctions laws.

Binance’s former CEO, Changpeng Zhao, also faced charges during this period. He served four months in prison for failing to implement anti-money laundering measures.

How U.S. Securities Laws are Impacting Global Crypto Platforms

The Binance case shows how U.S. securities laws hamper global cryptocurrency platforms. According to Binance, such laws are being applied unfairly to international companies.

Binance used its appeal to highlight the impact of technology on the global financial markets. Online platforms, the exchange noted, enable investors to trade internationally with ease. However, this connectivity also raises the risk of U.S. laws affecting foreign entities. The case against Binance is just one of the many legal battles the exchange faces. FTX filed a lawsuit against Binance, accusing its leadership of improperly transferring $1.8 billion to Binance.

Binance Branded a ‘Cauldron of Fraud’ by U.S. Regulators

Binance has been accused of fraudulent practices by the Securities and Exchange Commission (SEC). The agency attacked Binance’s business operations, saying its business model was one of a ‘cauldron of fraud.’

https://t.co/2bWmOIwjpa Chief: The SEC Called Us a Cauldron of Fraud, Without Any Evidence

Gary Gensler’s Securities and Exchange Commission (SEC) branded https://t.co/2bWmOIwjpa “a cauldron of fraud,” and used its power and influence to choke off the firm’s banking relations… pic.twitter.com/qb4ACtwBFa

— TetherAccess (@tetheraccessvip) January 14, 2025

Binance.US has suffered severe financial and reputational damage due to the allegations. The accusations have resulted in a significant loss of customers and the platform has been forced to lay off most of its staff. In a statement, interim CEO Norman Reed of Binance.US noted that the firm is now refocusing on rebuilding its operations.