Binance Faces New Legal Battle as Appeals Court Resurrects Class Action Lawsuit
Class Action Lawsuit Against Binance Reinstated
A recent appeals court ruling has overturned a previous dismissal of a class action lawsuit against Binance, the world’s largest cryptocurrency exchange. The ruling does not make any statement about whether certain crypto tokens are securities, but allows a group of investors to continue pursuing their argument.
Second Chance for Investors
The case, originally filed in April 2020, was brought by a group of investors who purchased securities from Binance, including the ERC-20 tokens EOS, TRX, ELF, FUN, ICX, OMG, and QSP. The ruling, from the Second Circuit Court of Appeals, reverses a decision made by a federal judge in the Southern District of New York to dismiss the lawsuit.
Increased Clarity for Securities Laws
The appeals court stated that the plaintiffs had “plausibly alleged” that transactions involving the assets in question occurred on servers within the U.S., and that they accessed Binance from the U.S. This directly challenges Binance’s previous claims that it had no headquarters or physical location. Additionally, the court declared that the plaintiffs had not exceeded the statute of limitations, as they started the clock when they purchased the tokens within a year of filing the lawsuit.
Tokens Still Under Scrutiny
The ruling does not determine whether the tokens involved in the suit are considered securities or not. If the case is not appealed and returns to the district court, the parties will have the opportunity to debate this matter.
Plaintiffs’ Reactions
Attorney Jordan Goldstein, representing the plaintiffs, stated, “We are pleased that a Second Circuit panel has unanimously acknowledged the strength of our claims and permitted this action to proceed. We look forward to prosecuting this class action against Binance and its founder Changpeng Zhao.”
Next Steps for Binance
Binance still has the option to appeal to the U.S. Supreme Court, but if they do not, or if the Supreme Court chooses not to hear the appeal, the case will return to the district court. The exchange has not yet responded to a request for comment.
