The US Supreme Court rejects Binance’s request to avoid a class action lawsuit

The US Supreme Court has rejected a petition by Binance and its founder, Changpeng Zhao.

The two sides sought review of a ruling that applies U.S. securities laws to the stock exchange despite its lack of a physical headquarters.

Judgment of the Supreme Court

The January 13 ruling follows a lawsuit by investors who accused the world’s largest crypto exchange of illegally selling unregistered tokens that lost much of their value.

The current case centers on whether Binance, which has no official location, is subject to US securities regulations because it served US customers.

In March 2024, the US Court of Appeals for the Second Circuit found that the country’s securities laws could apply even though the exchange was a non-US entity. This decision was made based on the fact that the transactions of American investors became irreversible in the United States.

The appeals court also noted that US-based investors used Binance to conduct trades while physically in the country. The argument was that since these transactions were processed on US servers, the exchange had to comply with US laws.

In December last year, Binance asked the Supreme Court to review this ruling, arguing that technological advances allow investors to trade with foreign platforms more easily. The crypto exchange said this global interconnectivity allows Americans to trade on foreign platforms.

Legal problems

The Supreme Court’s refusal to hear the appeal means the class action alleging the illegal sale of unregistered tokens will now continue.

In 2020, a group of investors who had purchased several tokens through Binance since 2017 filed a case against the exchange, claiming it failed to disclose the significant risks associated with the tokens and seeking compensation for their losses .

Years later, in 2023, the US Securities and Exchange Commission (SEC) accused the platform of illegally serving US investors. The agency alleged that Binance allowed US citizens to trade cryptocurrencies that should have been registered as securities.

In November of that year, the exchange agreed to a $4.3 billion settlement with the US Department of Justice (DOJ) for violating anti-money laundering (AML) and terrorist financing laws.

Separately, the exchange faced another class-action lawsuit in Canada in April 2023, shortly after announcing its exit from the country. The federal government also fined it $4.4 million in 2024 for violating AML regulations.

In addition, Binance and Zhao are being sued by the bankrupt estate of FTX for $1.8 billion over an allegedly fraudulent stock deal in 2021. The former CEO was also jailed for four months in April 2024 after be found guilty of not properly implementing the fight against money laundering. exchange controls.

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