The decision keeps investor claims from before 2019 in open court and turns down Binance’s request to submit the case to private arbitration in Singapore.
A federal judge in the US said that Binance can’t make a group of US consumers settle their claims for losses on crypto tokens they bought on its global platform before February 20, 2019. This means that a big class action is still going on in court.
US Judge says users lacked proper notice of 2019 terms update
On Thursday, District Judge Andrew Carter Jr. in the Southern District of New York ruled that those claims were not subject to Binance.com’s 2019 arbitration clause because users did not have enough notice when the company changed its terms of use from the 2017 version, which did not include any arbitration or class action waiver provisions.
The judge said that Binance used a general change-of-conditions clause and put updated 2019 terms on its website. There was no proof that the exchange told users about the new arbitration provision in any other way.
Carter said that Binance’s talk about operating in a “new world” way did not modify the basic contract law examination for internet-based agreements.
He decided that the 2019 arbitration clause couldn’t be used for claims that happened before its effective date of February 20, 2019, since the contract didn’t make it clear that it would cover behaviour that happened before that date.
Carter also said that a supposed US class action waiver that was hidden in a section heading of the 2019 conditions couldn’t be enforced in federal court since the contract never really spelt out the details of any such waiver and had to be read narrowly against Binance as the drafter.
Source: CourtListener
Investors’ claims revived after appeals court reversal
Five US investors from California, Nevada, and Texas are suing Binance and its creator Changpeng Zhao (CZ) in a proposed class action called Williams v. Binance. They say that Binance.com illegally offered unregistered securities and did not register as a broker-dealer.
In 2022, the case was thrown out, but in 2024, the Second Circuit brought the investors’ claims back to life and sent the case back to Carter’s court.
The plaintiffs voluntarily and correctly dismissed all claims that arose on or after Feb. 20, 2019.” Binance would “vigorously defend the limited claims that remain in this meritless case.”
The rest of the claims will now go to a federal US court instead of private arbitration in Singapore. This is because judges, not arbitrators, decide if crypto platforms can use unilaterally modified website conditions to limit litigation from investors.