Binance Hit With Reversal: US Investors Get Another Shot at Fraud Claims

Key Takeaways

• The US Court of Appeals overturned a lower court ruling, allowing US users to challenge Binance in court again.
• Users claim Binance violated US securities laws by selling them certain cryptocurrencies.
• The Court of Appeals found the lower court dismissed the case too early regarding US law application.

The United States Court of Appeals has overturned  a lower court’s rejection of a damages claim brought by American users against crypto exchange Binance.

This development allows the affected users another chance to show that their claims should not be regarded as an “impermissible extraterritorial application” of US securities laws.

Binance Lawsuit Back On: US Users Challenge

The  Court of Appeals has given new life to a lawsuit by American residents seeking to nullify contracts made with Binance, citing Section 29(b) of the Securities and Exchange Act of 1934.

Court documents  reveal the plaintiffs’ grievances arise from their Binance investments in a range of cryptocurrencies. These include EOS, TRX, ELF, FUN, ICX, OMG, and QSP. The users allege the exchange breached federal and securities laws by selling these tokens to Americans. The complainants describe their investments in these tokens as “empty promises”. As a result, they claim, many of them suffered significant losses as the value of these cryptocurrencies plummeted.

Binance Users Win Appeal With Revived US Lawsuit

The dismissal of a lawsuit  by a US District Court on March 31, 2022, was based on both the “untimeliness” of plaintiffs’ claims and the deemed “illegal” application of the law. After that, aggrieved Binance users sought recourse at the Court of Appeals.

The plaintiffs, initially sought legal redress for grievances associated with their transactions on Binance. However, they faced a setback when the lower court ruled against them.

However, in a significant turn of events , the Court of Appeals has now determined that the transactions conducted by Binance’s US-based users do indeed qualify as domestic transactions, breathing new life into the case.

Appeals Court Questions Lower Court’s Premature Judgment

According to  the court:

“First, we conclude that [the] Plaintiffs have plausibly alleged that the transactions at issue are domestic transactions subject to domestic securities laws because the parties became bound to the transactions in the United States, and therefore irrevocable liability attached in the United States.”

The Court of Appeals has ruled  that the claims against Binance, even those that emerged a year before filing, were presented within the legally mandated period.

Furthermore, it criticized the lower court’s premature judgment on the lack of connection between the users’ claims and the U.S. states governing the potential class members’ claims. This decision challenges the earlier ruling and opens the door for a more thorough examination of the case’s jurisdictional aspects.

About the Author

Teuta Franjkovic

Teuta is a seasoned writer and editor with more than 15 years of experience. She has expertise in covering macroeconomics and technology as well as the cryptocurrency and blockchain industries. She has worked for several publications as a journalist and editor, including Forbes, Bloomberg, CoinTelegraph, Coin Rivet, CoinSpeaker, VRWorld and Arcane Bear. Teuta began her professional career in 2005, working as a lifestyle writer at Cosmopolitan in Croatia. From there, she branched out to several other publications, covering mainly business and the economy. She then turned her attention to the world of cryptocurrency and blockchain, believing that crypto is among the most important inventions in the history of humanity. Her involvement in fintech began in 2014 and she has since lent her expertise in writing, editing and gathering information about the world of crypto, blockchain, NFTs and Web3. An all-round news hound, mentor, editor, and writer, Teuta enjoys teamwork and good communication. She holds a WSET2 diploma and has a thing for chablis, punkrock music and shoes. She also holds a double MA in Political science and Entrepreneurship.

See more

[email protected] LinkedIn Twitter