Binance Fails to Force Arbitration in SDNY Unregistered Token Case
A US federal judge has rejected an attempt by Binance to force arbitration in a lawsuit accusing the exchange of illegally selling unregistered crypto tokens. The ruling allows specific customer claims to proceed in open court.
US District Judge Andrew Carter ruled that Binance failed to provide adequate notice when it modified its terms of use in 2019 to include a mandatory arbitration clause and a class-action waiver, according to court documents.
Consequently, customers whose claims arose on or before 20 Feb 2019 may pursue public litigation rather than private dispute resolution.
Carter stated there was nom evidence that Binance sufficiently announced the provision or directed users to the updated terms. The plaintiffs alleged in the Southern District of New York (SDNY) case that Binance failed to warn them about the risks of purchasing seven specific tokens, including EOS and TRX, as required under US federal and state securities laws.
Binance and its founder, Changpeng Zhao, are named as defendants. The exchange has said it would vigorously defend the remaining claims in the ongoing litigation. The case will now proceed to open court, exposing the exchange to broader legal discovery.
