Binance Pushes to Move Class-Action Lawsuit to Arbitration

Binance is urging a U.S. federal judge to send a securities-related class-action lawsuit into private arbitration. In a May 16 court filing, Binance argued that the users involved in the lawsuit had agreed to its terms of service, which include mandatory arbitration and a waiver of rights to participate in a class action.

According to Binance, the group of plaintiffs challenging the exchange for allegedly selling unregistered securities had accepted its revised terms of use as of February 20, 2019. These updated terms, the exchange noted, not only mandated that disputes be settled through arbitration but also expressly barred users from launching or joining class actions. 

Binance emphasized that even if the court chooses to honor earlier terms for older claims, the 2019 class-action waiver should apply to all remaining allegations.

Lawsuit Resurfaces After Previous Dismissal

“The Court should hold that Plaintiffs are required to arbitrate claims that accrued after Feb. 20, 2019,” Binance said in the filing. It also pointed out that its terms granted it the right to modify policies without directly notifying individual users — a standard clause in many tech-related service agreements.

This case isn’t the first time Binance has had to defend itself in U.S. courts. In March 2022, District Judge Andrew Carter initially dismissed the lawsuit, accepting Binance’s argument that it isn’t subject to U.S. securities law due to its lack of a physical presence in the country. 

However, the plaintiffs successfully appealed the decision, and in March 2024, the U.S. Court of Appeals for the Second Circuit reversed the dismissal. Binance attempted to escalate the matter to the Supreme Court, but the request was denied in January 2024.

Legal Pressures Mount for Binance

Binance’s legal challenges have grown significantly since mid-2023, when the U.S. Securities and Exchange Commission (SEC) sued the exchange for selling unregistered securities. That case ended with a $4.3 billion settlement in November. 

Meanwhile, in April 2024, Binance faced a similar class-action lawsuit in Canada following its exit from the Canadian market in May 2023, further escalating its regulatory scrutiny across jurisdictions.