Binance in Trouble: Court Revokes Lawsuit Decision

The US Court of Appeals reversed an earlier decision. This decision had dismissed a class action by investors against the cryptocurrency platform Binance. The case was filed by Chase Williams in April 2020. He represented investors who believed they had been misled by Binance into purchasing crypto coins. These investors claimed that the coins were registered as securities, but that Binance did not have the necessary licenses as a stock exchange or securities broker.

The legal battle against Binance

The core of the lawsuit centers on the accusation that Binance promoted, offered and sold billions of dollars worth of “tokens” without registering them as securities. This would violate Section 12(a)(1) of the Securities Act of 1933. Therefore, the investors wanted to void their contracts with Binance and seek damages for Binance’s alleged violations.

Initially, the court dismissed the case on the grounds that the claims were filed too late under the relevant statutes of limitations. However, the appeals court found several errors in the trial court’s decision. In a document filed on March 8, the appeals court stated: “We hold that any of the trial court’s basis for dismissing plaintiffs’ claims, now before us on appeal, was incorrect.” This means that the lawsuit against Binance will continue as the court recognized the validity of the claims and their timely filing.

Challenges for Binance

This legal battle amid yet more legal challenges for Binance, especially from the US Securities and Exchange Commission (SEC). The SEC has taken action against several parties within the crypto sector, including Binance. In June 2023, the SEC indicted Binance, Binance.US, and its founder and former CEO Changpeng “CZ” Zhao.

They were accused of selling unregistered securities and improperly managing client assets. Binance subsequently reached a $4.3 billion settlement with the US Department of Justice in November 2023 after admitting to violating US laws against money laundering and terrorist financing. As part of this plea agreement, Zhao pleaded guilty to money laundering, with a criminal hearing scheduled for April.