Binance Faces Resurfaced Lawsuit for Alleged Securities Violations, Troubles Persist
In a stunning legal development, the 2nd US Circuit Court of Appeals in Manhattan has injected fresh energy into a lawsuit against Binance, the world’s leading cryptocurrency exchange. Investors have accused Binance of violating US securities laws by selling unregistered tokens, resulting in significant losses for investors.
The lawsuit alleges that investors suffered financial losses due to Binance’s sale of improperly registered tokens. The court has ruled that once a token is purchased, it cannot be canceled in the US, making it subject to US securities laws. Binance, however, disputes these claims, as they argue that they operate outside of US jurisdiction.
This legal showdown has far-reaching implications for crypto investors worldwide!
The Applicability of US Securities Laws
According to a report by Reuters, the appeals court, in a unanimous 3-0 decision, upheld the investors’ claims, affirming that domestic securities laws are indeed applicable. The court reasoned that once investors paid for the tokens, their purchases became irreversible within the United States. Notably, the court highlighted Binance’s use of domestic Amazon computer servers to host its platform as a crucial factor supporting this decision.
Claims and Token Purchases Still Under Debate!
The lawsuit focuses on investors who purchased seven tokens – ELF, EOS, FUN, ICX, OMG, QSP, and TRX – on Binance starting in 2017 and subsequently experienced significant drops in their value. Investors allege that Binance failed to provide sufficient warning about the associated risks, and they are seeking to recover their initial investments.
Binance’s Disputed Claims
Binance has consistently argued that US securities rules do not apply to its operations since its exchange is not based in the US. However, the new lawsuit challenges this assertion, placing the spotlight on the alleged violations and Binance’s responsibility under US law.
In response to the lawsuit, Binance referenced a 2010 Supreme Court ruling that limits the application of US securities laws outside of the country. Binance and its legal team have yet to comment on the matter. Meanwhile, Jordan Goldstein, representing the plaintiffs, expressed satisfaction with the court’s recognition of the strength of their case.
It is important to note that this case is separate from Binance’s recent admission of guilt and subsequent hefty penalty for violating anti-money laundering laws. Binance’s founder, Changpeng Zhao, confessed to related money laundering charges and stepped down as CEO. Sentencing is scheduled for April 30th. The case, known as Lee et al v Binance et al, is currently before the 2nd US Circuit Court of Appeals and the US District Court, Southern District of New York.
Binance’s Situation in Nigeria
In addition to the US, Binance is facing increased scrutiny from the Central Bank of Nigeria (CBN). The exchange recently removed the Nigerian naira from its peer-to-peer trading platform. Despite reports suggesting that Binance has been hit with a substantial fine, Bayo Onanuga, a Special Adviser to the Nigerian President, has officially denied these claims.
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