A recent development in the legal landscape has given a group of investors a renewed opportunity to pursue legal action against cryptocurrency exchange Binance, its former CEO Changpeng Zhao, and other executives. The Second Circuit Court of Appeals overturned a previous ruling that had dismissed the lawsuit, allowing the class action to move forward against the world’s largest crypto exchange.
Originally filed in April 2020, the lawsuit was initiated by a group of crypto investors who claimed to have purchased securities, including ERC-20 tokens like EOS, TRX, ELF, FUN, ICX, OMG, and QSP, from Binance. Of particular interest was the EOS token, issued by Block.One, which has ties to Bullish, the parent company of CoinDesk, the parent company of Binance.
In May 2022, Judge Andrew Carter of the Southern District of New York dismissed the case, citing statute of limitations issues and questioning Binance’s ties to the United States under federal securities laws. However, the recent ruling by the Second Circuit Court of Appeals overturned Judge Carter’s decision, emphasizing that the plaintiffs had plausibly alleged that the transactions occurred on U.S. servers and that they accessed Binance from the U.S.
The appeals court also addressed the timeliness of the lawsuit, stating that the statute of limitations clock started ticking when the plaintiffs purchased the tokens, well within the allowable timeframe for filing the suit. It’s important to note that the recent ruling only applies to seven of the tokens mentioned in the original complaint and does not determine their classification as securities.
If the case does not face further appeals and returns to the district court, the parties involved will have the opportunity to debate whether the tokens in question meet the definition of securities. Binance retains the option to appeal to the U.S. Supreme Court, which would impact the jurisdiction of the case.
In a separate development, Binance has encountered regulatory hurdles in Nigeria, leading to its decision to halt services involving the Nigerian naira (NGN) due to regulatory scrutiny. The Nigerian government imposed a significant fine on Binance as part of efforts to address concerns related to forex market manipulation and illicit fund movements, which are believed to have contributed to the devaluation of the naira.
As Binance navigates these legal and regulatory challenges, the crypto community awaits further developments in both the legal case in the U.S. and the exchange’s operations in Nigeria.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
