The US appellate court said that the district court’s justification for dismissing the action against cryptocurrency exchange Binance was “erroneous.”
A US appeals court reversed a decision that had dismissed a class-action lawsuit filed by investors against Binance, a cryptocurrency exchange. Claimantly, investors were misled into believing they were purchasing securities-registered cryptocurrency tokens.
An appeal of the district court’s decision to reject investors’ claims of lack of transparency in Binance’s securities sale has been reversed, according to a March 8 filing with the United States Court of Appeals for the Second Circuit.
As per the statement, “We maintain that all the reasons the district court gave for rejecting the Plaintiffs’ claims that are under appeal were incorrect.”
Bringing the case on behalf of investors in his shoes, Chase Williams claimed that Binance had committed to sell securities without being licenced as a broker-dealer or securities exchange. The complaint was filed in April 2020. Investors are also attempting to have the agreements they made with Binance cancelled.
The Securities Act of 1933 (Securities Act), 15 U.S.C. § 77l(a)(1), is allegedly violated by Binance, according to the plaintiffs, who are suing for damages. They allege that Binance did this by illegally marketing, offering, and selling crypto-assets worth billions of dollars that were not registered as securities.
The investors’ claims were deemed premature by the district court, which dismissed the case based on the applicable statute of limitations. Nonetheless, the plaintiffs’ assertion that Binance is governed by domestic securities rules and that their original submission was made on time is accepted by the appeals court. This occurs while the US securities regulator’s continuous legal challenges against Binance continue to plague the company.
According to reports on March 6, the U.S. Securities and Exchange Commission (SEC) has not responded to requests for information about the custody of customer assets because it is either “unable or unwilling.”
According to the SEC’s lawsuit filed in June 2023, Binance, Binance.US, and its founder and former CEO Changpeng “CZ” Zhao traded unregistered securities and mixed customer assets in a different company that Zhao owned.
With the U.S. Department of Justice, Binance negotiated a $4.3 billion settlement in November 2023, acknowledging that it had broken laws against funding terrorism and money laundering.
Zhao entered a guilty plea to money laundering charges as part of the settlement, and his criminal sentence hearing is scheduled for April.