A federal judge in New York has rejected Binance’s request to move a protracted securities class action suit into private arbitration, a decision that keeps Binance, one of the world’s largest cryptocurrency exchanges, tied up in court over allegations from American users. These users claim the platform enabled the trading of unregistered digital assets. The ruling, delivered by Judge Andrew L. Carter Jr., ensures that the lawsuit will remain in the public court system rather than behind closed arbitration panels.
Court Rejects Binance’s Claim That Users Had Sufficient Notice
Back in 2019, Binance revised its terms of service to include both an arbitration clause and restrictions against class-action lawsuits. Yet, the court found that users had not been adequately notified of these significant changes. Most claimants had opened their accounts before the revised terms took effect and did not receive individualized updates regarding the newly imposed arbitration provisions. The mere addition of updated terms to Binance’s website, the judge ruled, did not constitute reasonable notice.
Judge Carter further underscored that users cannot reasonably be expected to monitor every unilateral amendment a company makes to its service contracts. The court also determined that the arbitration clause could not be applied retroactively to earlier account holders. While Binance had referenced a class action waiver in its agreement, the judge criticized the ambiguous language surrounding the waiver’s scope, ultimately deciding that any lack of clarity should be interpreted in favor of the plaintiffs.
Securities Status of Tokens Central to Lawsuit
The class action—filed by plaintiffs based in California, Nevada, and Texas—is part of a wave of litigation initiated in 2020 against major crypto exchanges and token issuers across the United States. Although the lawsuit was initially dismissed by a lower court, an appeals court revived the case, ruling that US securities laws could plausibly apply to Binance’s operations. The Supreme Court declined further review, sealing the appellate decision.
As the case proceeds, debate will likely focus on whether certain tokens sold through Binance during the relevant period qualified as securities under US law. Notably, plaintiffs have narrowed their claims, abandoning allegations related to post-2019 transactions and confining the lawsuit to earlier digital asset deals.
US Senators Push for New Binance Investigation
While legal proceedings play out in the courts, Binance also faces fresh scrutiny in Washington. A group of eleven US senators has formally asked regulators to probe Binance’s compliance with anti-money laundering and sanctions obligations. Lawmakers flagged large transfers of digital assets linked to Iranian addresses made possible via the platform. They also cautioned that new financial tools developed by Binance might enable transactions in violation of US regulations.
In direct response to mounting public concerns, Connecticut Senator Richard Blumenthal has launched a document review focusing on the exchange’s compliance practices, further extending the regulatory gaze on Binance’s operations.
Binance, for its part, categorically denied the allegations. In statements, the company insisted it promptly reports suspicious activity to the proper authorities and maintains that Iranian users have been barred from accessing the platform. The firm also dismissed recent media stories about alleged ties to Iran and denied claims suggesting employees were terminated for reporting questionable transactions within the company.
Although the US Securities and Exchange Commission closed its own investigation into Binance last year, the ongoing class action continues to cast a long shadow over the exchange’s US business.
