Binance cannot force arbitration in crypto loss claims, says US judge
A US judge ruled Binance must face lawsuits from customers claiming losses on unregistered tokens, rejecting their attempt to enforce arbitration.Summary
A federal judge in Manhattan rejected Binance's attempt to force customers into arbitration regarding claims that the exchange illegally sold unregistered tokens, leading to significant losses. Judge Andrew Carter ruled that customers could pursue claims originating before February 20, 2019, in court because Binance failed to adequately inform them about changes to its terms of use that introduced arbitration and waived class action rights. The judge found no evidence Binance actively announced the arbitration provision or clearly indicated its location within the terms of use, deeming the class-action waiver ambiguous and unenforceable.
The lawsuit was initially dismissed in 2022 but was revived by a federal appeals court. Customers allege Binance failed to disclose the substantial risks associated with purchasing seven specific tokens – ELF, EOS, FUN, ICX, OMG, QSP, and TRX – violating federal and state securities laws. They seek to recover their investments.
Binance founder Changpeng Zhao is also named as a defendant in the case. Lawyers for Binance and Zhao have not yet responded to requests for comment. The ruling highlights a preference among some defendants for arbitration due to its potential for confidentiality, difficulty in evidence gathering, and lower costs, but Judge Carter’s decision allows the plaintiffs to proceed with their claims in a public court setting.
(Source：The Economic Times)