Leading crypto exchange Binance has submitted a plea to a U.S. federal court, requesting arbitration for all participants in a class-action lawsuit in which it is accused of selling unregistered securities. Binance contends that the claimants waived their rights to participate in a class action, as stipulated by the company’s terms and conditions.
The exchange, in a May 16 submission to a New York federal court, emphasized that its terms of service, agreed upon by the claimants, include a clause mandating arbitration for all disputes, and another clause that prohibits users from instigating class actions against the firm.
“The Court should rule that the Plaintiffs must arbitrate all claims that arose after February 20, 2019, even if the Court persists in its initial decision concerning claims that arose prior to this date, and that the class-action waiver in the 2019 Terms of Use is valid for all of the Plaintiffs’ claims,” Binance stated.
In March, Judge Andrew Carter rejected Binance’s bid to send all of the class action claims to arbitration for users who purchased tokens on the platform between April 1, 2017, and February 20, 2019. He also partially turned down the motion for users who bought tokens post-2019, until a verdict could be reached on the extent of the arbitration clause’s application. Binance, in its recent filings, argued that it updated its terms in February 2019 to incorporate the arbitration clause, and a prior version of the terms had a clause enabling Binance to modify the terms as necessary without individual notice.
In March 2022, Binance secured a dismissal of the case by Judge Carter after arguing that it is not subject to U.S. securities laws as it lacks a physical headquarters in the country. However, in March 2024, the U.S. Court of Appeals for the Second Circuit overturned this decision, and the Supreme Court later declined to hear Binance’s appeal in January of that year.
Binance has seen its legal difficulties in the U.S. intensify since mid-2023, culminating in a Securities and Exchange Commission lawsuit for the sale of unregistered securities, which was settled for $4.3 billion in November 2023. Binance also faced a class action in Canada in April 2024 for alleged violations of securities laws after announcing its exit from the country in May 2023.
