Binance wants arbitration for all members of securities class suit

Binance is pushing for arbitration in a class-action lawsuit alleging the sale of unregistered securities. The exchange, in a May 16th filing to a New York federal court, contends that the plaintiffs waived their right to a class action by agreeing to the company’s terms of service. These terms, Binance argues, include a clause mandating arbitration for all claims and explicitly prohibiting class actions. The filing specifically requests that all claims accruing after February 20, 2019, be sent to arbitration, even if the court upholds its prior ruling regarding claims predating that date.

This latest move follows a March decision by Judge Andrew Carter, who partially denied Binance’s previous request for mandatory arbitration. Judge Carter’s ruling distinguished between claims arising before and after February 20, 2019, the date of a key terms of service update incorporating the arbitration clause. Binance’s argument hinges on the enforceability of this updated clause and a prior clause allowing for unilateral term amendments without individual user notification.

The current legal battle is a significant development in the ongoing saga of Binance’s legal challenges in the US. The exchange previously had a lawsuit dismissed in March 2022, arguing it wasn’t subject to US securities laws due to lacking a physical US headquarters. However, this decision was overturned by the US Court of Appeals for the Second Circuit in March 2024, with the Supreme Court declining to hear Binance’s appeal in January 2024.

The SEC lawsuit against Binance, filed in mid-2023, alleging the sale of unregistered securities, resulted in a $4.3 billion settlement in November 2023. Further adding to Binance’s legal woes is a class action lawsuit filed in Canada in April 2024, stemming from the company’s May 2023 announcement of its departure from the country. The outcome of this ongoing New York class action lawsuit will significantly impact Binance’s future operations and legal standing in the United States. The judge’s decision regarding the enforceability of the arbitration clause will be pivotal in determining the course of the litigation.