Federal judge Andrew L. Carter Jr., sitting in New York, rejected Binance exchange’s request to conduct proceedings in private arbitration in the long-running securities case. With this decision, the class action lawsuit initiated by US users alleging that unregistered digital assets were sold on the platform will continue to be heard in court.
Court Deems Sufficient Notice of Contract Changes
Binance updated its terms of service in 2019 and added an arbitration clause and class action restriction. However, the court found that users were not adequately informed of these changes. It was stated that the plaintiffs opened their account before the current conditions and did not receive special notification about the new conditions. Merely adding new conditions to the website was not considered sufficient notice.
The judge emphasized that users are not obliged to regularly follow contract changes made unilaterally by the company. It was also concluded that the arbitration clause could not be applied retroactively. Accordingly, although the title in the agreement regarding the company’s class action waiver is stated, it was noted that the text regarding the scope of this waiver is ambiguous and should be interpreted against Binance.
The Nature of Securities Will Be Discussed in the Case
This case, where plaintiffs are from California, Nevada and Texas, It is known to be part of multiple lawsuits against cryptocurrency exchanges and token issuers that began in 2020. The file, which was first rejected in the lower court, was brought back to the agenda with the decision of the upper court. The Second Circuit Court of Appeals ruled that US securities regulations may apply to Binance. The US Supreme Court refused to review this decision.
As a result, the case is expected to continue with discussions on whether some tokens listed on the platform can be considered securities in the participating period. The plaintiff also waived its claims for post-2019 activities and limited the lawsuit to previous token transactions only.
US Senators Request a New Investigation About Binance
Binance also faces new scrutiny in Washington as the legal process continues. Eleven senators from the US Senate requested the relevant authorities to examine the company’s compliance with sanctions and anti-money laundering obligations. Senators brought up allegations that a significant amount of digital assets were transferred to Iran-related addresses via the platform. Warnings were shared that transactions made through recently developed payment instruments may also violate the law.
After these allegations became public, Connecticut senator Richard Blumenthal initiated a document review regarding Binance’s compliance controls.
Binance, on the other hand, announced that it rejected these allegations, reported suspicious transactions to the relevant authorities, and Iranian users were blocked from accessing the platform. He also stated that they do not find the news in the media about Iran-related transfers and the allegations that employees were fired for bringing these transactions to the agenda to be true.
While the U.S. Securities and Exchange Commission concluded its own investigation of the company last year, the ongoing civil class action process remains lingering.
