Binance and CZ lose bid to squash US crypto lawsuit

Binance and its founder Changpeng Zhao lost a court appeal to dismiss a lawsuit filed in the United States alleging securities violations.

The US Supreme Court rejected Binance and former CEO Changpeng ‘CZ’ Zhao’s appeal to throw out a class-action lawsuit filed by investors who alleged the company sold unregistered securities.

The complaint filed by crypto traders accuses Binance of inadequate risk disclosure regarding tokens such as Tron (TRX), EOS (EOS), among others. Recovering the funds invested in these tokens is one of the main objectives stated in the lawsuit.

Binance and its legal team denied the allegations, arguing that the exchange’s operations fell outside the jurisdiction of US securities laws. Based on this claim, Binance initially requested that the case be dismissed by the United States Court of Appeals for the Second Circuit.

However, the Court of Appeals ruled that Binance was responsible for the transactions, stating that investors purchased the tokens from the United States. The Supreme Court upheld that decision, according to a report dated January 13.

The news could be another legal blow to the cryptocurrency’s largest centralized exchange, which is already facing court battles on US soil.

In November 2023, Binance reached a $4.3 billion settlement with the Department of Justice for federal anti-money laundering violations. As part of the agreement, CZ resigned as CEO and served four months in prison.

The DOJ lawsuit was unrelated to the class-action lawsuit filed by investors. CZ’s company is also involved in a securities lawsuit with the U.S. Securities and Exchange Commission.