In a recent development, a United States appeals court has overturned a ruling that dismissed a class-action lawsuit against cryptocurrency exchange Binance. The investors had raised concerns about transparency issues in Binance’s sale of alleged securities. The district court had initially dismissed these claims, but the appeals court has now sided with the investors, stating that the reasons for dismissal were incorrect.
The lawsuit was filed in April 2020 by Chase Williams on behalf of investors who believed that Binance had sold securities without being registered as a securities exchange or broker-dealer. The investors also sought to cancel the contracts they had entered into with Binance. They claimed that Binance violated the Securities Act of 1933 by unlawfully promoting and selling billions of dollars’ worth of unregistered crypto-assets called “tokens.”
Initially, the district court dismissed the lawsuit, citing the investors’ claims as untimely according to the relevant statutes of limitations. The appeals court has disagreed and recognized that Binance is indeed subject to domestic securities laws. It also acknowledged that the initial filing by the plaintiffs was timely.
This ruling adds to the legal challenges that Binance is currently facing in the United States. The U.S. Securities and Exchange Commission (SEC) has already sued Binance, its U.S. counterpart Binance.US, and its founder Changpeng “CZ” Zhao for allegedly selling unregistered securities and mixing customer assets. The SEC has also criticized Binance for failing to provide information about the custody of customer assets.
Binance reached a $4.3 billion settlement with the U.S. Department of Justice in 2023 for violating money laundering and terrorism financing laws. As part of the settlement, Zhao pleaded guilty to money laundering charges and is awaiting his criminal sentencing hearing in April.
These ongoing legal challenges paint a challenging picture for Binance’s operations in the United States. The appeals court ruling in favor of the investors in the class-action lawsuit further highlights the importance of adhering to securities laws and maintaining transparency in the cryptocurrency industry.
This ruling emphasizes the importance of maintaining transparency and adhering to securities laws for the stability of the cryptocurrency ecosystem.
Way to go, appeals court! Binance must adhere to securities laws just like any other financial institution.
Finally, the investors’ concerns are being addressed! This ruling pushes the crypto industry in the right direction towards transparency and accountability.