Crypto exchange Binance has taken a significant legal step by requesting a U.S. federal judge to compel arbitration for all members of a class-action lawsuit that accuses the company of selling unregistered securities. This move comes as Binance argues that its terms of service, which users agreed to, include clauses that waive the right to class action lawsuits.
Key Takeaways
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Binance filed a motion on May 16, 2025, to send all class-action claims to arbitration.
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The exchange claims users waived their right to class actions under its terms of service.
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A previous ruling by Judge Andrew Carter partially denied Binance's request for arbitration.
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Binance's legal troubles have escalated following a $4.3 billion settlement with the SEC in late 2023.
Background Of The Case
The class-action lawsuit alleges that Binance improperly sold securities to its users. In its recent filing, Binance contends that the terms of service, which were updated in February 2019, contain a clause mandating arbitration for all claims. This clause also prohibits users from initiating class action lawsuits against the exchange.
Binance stated, "The Court should hold that Plaintiffs are required to arbitrate claims that accrued after Feb. 20, 2019, even if the Court adheres to its initial decision as to claims that accrued before then."
Previous Court Rulings
In March, Judge Andrew Carter denied Binance's request to send all claims to arbitration for users who purchased tokens between April 1, 2017, and February 20, 2019. The judge partially denied the motion for users who bought tokens after 2019, pending further clarification on the applicability of the arbitration clause.
Earlier, in March 2022, Judge Carter had dismissed the lawsuit, siding with Binance's argument that it was not subject to U.S. securities laws due to the absence of a physical headquarters in the country. However, this decision was overturned by the U.S. Court of Appeals for the Second Circuit in March 2024, and the Supreme Court declined to hear Binance's appeal in January 2025.
Binance's Legal Challenges
Binance's legal issues have intensified since mid-2023, particularly after the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the company for selling unregistered securities. This lawsuit was settled for $4.3 billion in November 2023, marking a significant financial impact on the exchange.
Additionally, Binance faced a class action lawsuit in Canada in April 2024, alleging violations of securities laws after the company announced its exit from the Canadian market in May 2023.
Conclusion
As Binance seeks to enforce arbitration for all members of the class-action lawsuit, the outcome of this legal maneuver could have significant implications for the company and its users. The ongoing legal battles highlight the complexities and challenges faced by cryptocurrency exchanges in navigating regulatory frameworks and user agreements. The court's decision on this matter will be closely watched by industry stakeholders and legal experts alike.
Sources
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Binance wants arbitration for all members of securities class suit — TradingView News, TradingView.
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Binance wants arbitration for all members of securities class suit, StartupNews.fyi.
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Binance wants arbitration for all members of securities class suit, Cointelegraph.
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Binance Argues All Class Members Must Arbitrate Claims, Law360.
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