Binance class-action lawsuit dismissed by appeals court

A US appeals court has overturned a ruling that dismissed a class-action lawsuit against investor-led cryptocurrency exchange Binance. The investors said they were misled into thinking they were buying cryptocurrency tokens registered as securities.

According to the lawsuit filed March 8 with the United States Court of Appeals for the Second Circuit, the district court's ruling that dismissed the investors' allegations of transparency issues in Binance's securities sale was overturned for the investors.

“We hold that the district court erred on each of its grounds for dismissing plaintiffs' claims before us on appeal,” the filing states.

Chase Williams filed a lawsuit on behalf of investors in the same situation in April 2020, arguing that Binance contracted to sell securities without registering as a securities exchange or broker-dealer.

In addition, the investors want to cancel their contract with Binance.

“Plaintiffs seek damages that they allege were caused by Binance's unlawful promotion of the offering, pursuant to Section 12(a)(1) of the Securities Act of 1933 (Securities Act), 15 USC § 77l(a)(1), and billions in damages. He sold dollar-denominated crypto-assets called “tokens” that were not registered as collateral.

The district court dismissed the suit, finding the investors' claims untimely within the applicable statute of limitations.

However, the appeals court agreed with the plaintiffs that Binance was subject to local securities laws and that their initial application was timely.

This comes as Binance continues to grapple with ongoing legal challenges from the US securities regulator.

Related: Binance.US says ‘radioactive' for banks, SEC issues ‘near-death blow'

On March 6, Cointelegraph reported that the US Securities and Exchange Commission (SEC) was “unable or unwilling” to respond to requests for information about holding client assets.

The SEC indicted Binance, Binance.US and founder and former CEO Changpeng “CZ” Zhao in June 2023, alleging that they sold unregistered securities and mixed client assets through a separate company controlled by Zhao.

In the year In November 2023, Binance reached a $4.3 billion settlement with the US Department of Justice, admitting to violating US money laundering and terrorist financing laws.

As part of the deal, Zhao pleaded guilty to money laundering and faces a criminal sentencing hearing in April.

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