Binance received bad news from the US. A US judge rejected Binance’s arbitration request.
District Judge Andrew Carter of the Southern District of New York ruled that Binance does not have the authority to compel U.S. users to arbitrate for damages arising from cryptocurrency purchases made on its platform before February 20, 2019.
However, the judge ruled that the ongoing class action lawsuit would be heard publicly in federal court.
Therefore, customers who accuse Binance of selling unregistered tokens will be able to pursue damages claims arising before February 20, 2019, in court.
The judge, in his review, found that Binance unilaterally updated its Terms of Use in 2019, amending the terms to include a waiver of the right to arbitration and the right to class action, without notifying customers of this change.
The ruling also stated that there was no evidence that Binance had announced the arbitration order or explained to customers where this order could be found in its terms of use.
According to the judge, since the terms of use in 2017 did not include arbitration or class action waiver provisions, the changes made in 2019 cannot be applied retroactively to claims relating to periods prior to that date.
The class-action lawsuit known as Williams v. Binance was filed by five US investors from California, Nevada, and Texas, alleging that Binance and its founder, CZ, illegally sold unregistered securities and failed to register as brokerage firms. The lawsuit was dismissed in 2022, but in 2024 the US Second Circuit Court of Appeals remanded it back to the lower court.
In the retrial, Judge Carter rejected Binance’s request for arbitration, while Binance stated that the plaintiffs had voluntarily withdrawn claims arising after February 20, 2019, and that the company would continue to defend against the remaining claims.
This decision allows users to file lawsuits for damages incurred before February 20, 2019, and for the case to be heard publicly. Altcoins named in the lawsuit include ELF, EOS, FUN, ICX, OMG, QSP, and TRX.
*This is not investment advice.