Binance, the leading cryptocurrency exchange in the world, is facing legal challenges in the United States as American investors have filed a class action lawsuit against the company. The lawsuit alleges that Binance violated securities laws by offering and promoting unregistered crypto tokens and misled investors about the safety and regulatory status of certain assets listed on its platform.
In response to the lawsuit, Binance has asked a U.S. court to dismiss the case based on an arbitration clause in its user agreement. The company argues that the user agreement includes a binding arbitration clause and a class action waiver, which requires disputes to be resolved privately rather than in court. Binance claims that users agreed to this clause at the time of their account registration.
The legal dispute began when U.S. District Judge Andrew L. Carter Jr. ruled that Binance could not force arbitration for users who purchased tokens before the implementation of its amended terms of use. However, the judge later vacated this decision, allowing both parties to file additional briefs on the issue.
Binance’s arbitration strategy has come under scrutiny as the company continues to face legal challenges globally. In the U.S., Binance settled with regulators for $4.3 billion over allegations of selling unregistered securities and failing to maintain proper compliance controls. Founder Changpeng Zhao pleaded guilty to a related criminal charge, and Binance paid a hefty settlement to the Commodity Futures Trading Commission.
In addition to its legal troubles in the U.S., Binance is also facing a class action lawsuit in Canada over alleged securities law violations. The company’s exit from the Canadian market in 2023 has sparked legal action from investors.
Despite these legal challenges, Binance remains a dominant force in the cryptocurrency industry. The company’s arbitration clause may play a crucial role in resolving the current class action lawsuit in the U.S. as it seeks to dismiss the case and address the allegations through private arbitration proceedings.