US Supreme Court has dismissed the appeal submitted by Binance concerning investors lawsuit on unregistered securities.
An appeal by cryptocurrency exchange Binance and its creator, Changpeng “CZ” Zhao, has been denied by the US Supreme Court. The appeal concerns a class-action lawsuit filed by investors who claimed the exchange unlawfully issued unregistered tokens that experienced a substantial decrease in value.
Supreme Court Denies Binance Petition For Review
Even though the cryptocurrency exchange doesn’t have a physical headquarters in the US, the Supreme Court of the US rejected a petition to overturn a lower court decision that said US securities laws applied to it on January 13.
A lower court said in March that the case may move on because, even though Binance is not an American company, token purchases were completed in the US, and transactions occurred on US computers.
The 2020 Class Action Lawsuit Against Binance To Continue
A class action lawsuit was launched against Binance in 2020 by a group of cryptocurrency investors who claimed that the exchange “wrongfully engaged in millions of transactions” and neglected to alert users to the “significant risks” associated with some of its tokens.
According to the lawsuit, Binance sold unregistered tokens and “failed to register as an exchange or broker-dealer,” violating securities legislation. The investor suffered significant losses after purchasing ELF, EOS, FUN, ICX, OMG, QSP, and TRX on the cryptocurrency exchange.
Because the investors “sued too late,” US District Judge Andrew Carter dismissed the case in March 2022. Regardless of whether Binance used “Amazon computer servers and Ethereum blockchain technology in the United States,” the judge held that domestic security regulations were irrelevant to Binance since it was not a domestic exchange.
However, the case was resurrected in March 2024 after the Manhattan-based 2nd US Circuit Court of Appeals ruled 3-0 that the investors’ claims of domestic securities laws were plausible.
Because the exchange “notoriously denies the validity of any other country’s securities regulation regime,” Judge Alison Nathan contended that Binance’s use of domestic Amazon servers to run its platform supported the ruling.
