NY Judge Denies Binance Arbitration for Pre-2019 Claims

A federal judge in New York ruled Thursday that Binance, the world's largest cryptocurrency exchange, cannot compel a group of U.S. customers to arbitrate claims related to losses on tokens purchased on its global platform before February 20, 2019, allowing the lawsuit to proceed in open court.

U.S. District Judge Andrew Carter Jr. in Manhattan determined that the exchange's 2019 terms of use, which introduced an arbitration clause and class action waiver, did not apply retroactively to earlier transactions. The plaintiffs, five investors from California, Nevada and Texas, filed the proposed class action lawsuit, known as Williams v. Binance, accusing Binance and its founder, Changpeng Zhao, of illegally selling unregistered securities and failing to register as a broker-dealer. The suit centers on seven tokens—Aelf (ELF), EOS, FunFair (FUN), Icon (ICX), OmiseGO (OMG), Quantstamp (QSP) and TRX—that the investors bought on Binance.com and that later lost significant value. The customers alleged that Binance neglected to warn them of the substantial risks involved, violating federal and state securities laws, and sought to recover their investments.