Binance Faces Class-Action Lawsuit as Supreme Court Denies Appeal
Global cryptocurrency exchange Binance is facing a class-action lawsuit in the United States after the Supreme Court declined to review a lower court's decision. The lawsuit, brought by investors, alleges that Binance illegally sold unregistered securities. The Supreme Court's decision on January 13 allows the case to proceed, marking another legal hurdle for the exchange and its founder, Changpeng "CZ" Zhao.
The Heart of the Matter: Do US Securities Laws Apply?
The lawsuit, originally filed by Chase Williams in April 2020, centers on whether U.S. securities laws apply to Binance, despite the exchange not having a physical presence in the country. In March, a lower court ruled that the case could proceed, citing that token purchases were finalized in the U.S. and transactions occurred on U.S.-based servers.
Binance appealed this decision in December, arguing that technological advancements have made it easier for Americans to participate in foreign financial markets. However, the Supreme Court's refusal to hear the appeal upholds the lower court's ruling.
A String of Legal Battles for Binance and CZ
This lawsuit is just one of several legal challenges facing Binance and Zhao. In November 2023, Binance reached a $4.3 billion settlement with the U.S. Department of Justice for violating money laundering and terrorism financing laws. The company has also faced a class-action lawsuit in Canada and is being sued by the FTX bankruptcy estate for $1.8 billion over a share deal from 2021.
Zhao, who stepped down as Binance CEO as part of the settlement with the DOJ, was sentenced to four months in prison in April after pleading guilty to enabling money laundering at the exchange. He was released in late September. More recently, Zhao and Binance faced a separate lawsuit in August 2024 for allegedly laundering stolen crypto.
What's Next for Binance?
The Supreme Court's decision to deny Binance's appeal adds another layer of complexity to the exchange's ongoing legal battles in the United States. As the class-action lawsuit moves forward, the outcome could have significant implications for how cryptocurrencies are regulated and traded, not just for Binance, but for the broader crypto industry as well.