A federal appeals court on Friday revived a lawsuit where investors accused Binance, the world's largest cryptocurrency exchange, of violating US securities laws by selling unregistered tokens that lost much of their value.
In a 3-0 decision, the 2nd US Circuit Court of Appeals in Manhattan said investors in the proposed class action plausibly alleged that domestic securities laws applied because their purchases of tokens had become irrevocable in the United States once they paid for them.
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Circuit Judge Alison Nathan said Binance's use of domestic Amazon computer servers to host its platform supported this outcome, given how Binance "notoriously denies the applicability of any other country's securities regulation regime."
The appeals court also said investors could pursue claims arising from purchases made within the year before they sued.
Friday's decision reversed a March 2022 ruling by US District Judge Andrew Carter in Manhattan, and returned the case to him.
The appeal covered investors who had bought seven tokens - ELF, EOS, FUN, ICX, OMG, QSP and TRX - through Binance starting in 2017, and which soon lost much of their value.
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They claimed that Binance failed to warn them about the tokens' "significant risks" and sought to recoup what they paid.
Binance argued that US securities laws did not apply because its exchange was located outside the country.
It cited 2010 US Supreme Court decision, Morrison v National Australia Bank, that limited the extraterritorial reach of domestic securities laws.
Binance and its lawyers did not immediately respond to requests for comment.
Jordan Goldstein, a lawyer for the plaintiffs, said his clients were pleased that the court "unanimously acknowledged the strength of our claims."
The case is separate from Binance's recent guilty plea and more than $4.3 billion penalty for violating federal anti-money laundering and sanctions laws.
Binance founder Changpeng Zhao pleaded guilty to related money laundering violations and stepped down as chief executive. His sentencing is scheduled for April 30.
FAQs
Zhao pleaded guilty late last year to money-laundering violations and stepped down as CEO of Binance. The company itself was fined $4.3bn. Zhao was fined $50m last year. Judge Richard Jones told Zhao that there were a number of mitigating factors in his sentencing, including that he had cooperated with law enforcement.
Does Binance have a lawsuit? ›
Binance and exchanges including Kraken are being sued at London's Competition Appeal Tribunal (CAT) in a case brought on behalf of over 200,000 BSV owners. Lawyers representing BSV Claims, a vehicle set up to pursue the case, say the exchanges engaged in anti-competitive behaviour to delist BSV in 2019.
What is the class action lawsuit against cryptocurrency? ›
A class-action lawsuit against Coinbase was recently filed by a serial crypto litigator on behalf of its customers, alleging the exchange sells unregistered securities and operates as an unlicensed broker/dealer.
What is the SEC dispute with Binance? ›
In June 2023, the SEC filed the lawsuit against Binance, its founder Changpeng Zhao and Binance's U.S. arm, citing the defendants' “blatant disregard of the federal securities laws” that allowed them to enrich themselves by the billions while putting their customers' assets at risk.
Is Binance under trouble? ›
The CEO of Binance Holdings Limited (aka Binance), the largest cryptocurrency exchange in the world, pleaded guilty in November 2023 and agreed to pay $4 billion to resolve the investigation into violations related to the Bank Secrecy Act (BSA)—i.e., failure to register as a money-transmitting business.
Who is the current owner of Binance? ›
CEO Changpeng Zhao founded Fusion Systems in 2005 in Shanghai; the company built high-frequency trading systems for stockbrokers.
How to get your money back after being scammed from cryptocurrency? ›
Cryptocurrency payments typically are not reversible. Once you pay with cryptocurrency, you can only get your money back if the person you paid sends it back. But contact the company you used to send the money and tell them it was a fraudulent transaction.
Can I claim cryptocurrency losses? ›
If you sell your crypto for a loss, the IRS allows you to offset losses against other income on your tax return. These so-called “realized losses” can be used to offset other taxable investment profits. When you hear the term “realized,” it usually means that an asset was sold.
How do I file a claim against crypto? ›
How To Report Cryptocurrency Scams
- the FTC at ReportFraud.ftc.gov.
- the Commodity Futures Trading Commission (CFTC) at CFTC.gov/complaint.
- the U.S. Securities and Exchange Commission (SEC) at sec.gov/tcr.
- the Internet Crime Complaint Center (IC3) at ic3.gov/Home/FileComplaint.
Binance was banned in U.S. in 2019 but In response, Binance and other investors opened Binance US to buy and sell crypto, a separate exchange registered with the United States Financial Crimes Enforcement Network and designed to comply with all applicable US laws.
Generally, Binance has a customer support team that can assist with resolving transaction issues and providing refunds if necessary. To initiate the refund process, you should first contact Binance's customer support team through their official website or support channels.
What is the controversy with Binance? ›
Binance, which has no designated global headquarters, has courted controversy worldwide. In November 2023, its founder and erstwhile chief executive Changpeng Zhao pled guilty to money laundering charges by the US Securities and Exchange Commission.
What happened to Binance? ›
Binance, the world's largest cryptocurrency exchange, has faced a series of unprecedented legal and corporate challenges during 2023—the most recent of which involved the departure of Changpeng Zhao, Binance's charismatic founder, after he pleaded guilty to US money laundering charges.
Did Binance get hit with a fine? ›
The federal anti-money laundering agency has issued a $6-million fine to cryptocurrency exchange company Binance Holdings Ltd. Fintrac says Binance failed to register with the agency as a foreign money services business.
What is the Binance scandal in Nigeria? ›
Recently, the Nigerian government cracked down on the cryptocurrency platform in a bid to strengthen the naira. Among other charges filed by the current administration against Binance were tax evasion, currency speculation, and money laundering to the tune of $35,400,000.
