Crypto Exchange Binance Wins Dismissal of US Lawsuit Over Digital Token Sales

The lawsuit had been brought in Manhattan by digital token investors who had bought nine tokens that lost much of their value.

Crypto Exchange Binance Wins Dismissal of US Lawsuit Over Digital Token Sales

Binance has an opaque corporate structure, with a holding company registered

Highlights
  • US District Judge Andrew Carter said the investors sued too late
  • The case is Anderson et al v Binance et al, US District Court
  • A federal judge on Thursday dismissed a lawsuit accusing Binance

A federal judge on Thursday dismissed a lawsuit accusing Binance, the world's largest cryptocurrency exchange by trading volume, of violating US securities laws by selling unregistered tokens and failing to register as an exchange or broker-dealer.

The lawsuit had been brought in Manhattan by digital token investors who had bought nine tokens - EOS, QSP, KNC, TRX, FUN, ICX, OMG, LEND and ELF - through Binance's online exchange starting in 2017, and which soon lost much of their value.

In a 327-page complaint, the investors claimed that Binance "wrongfully engaged in millions of transactions" and failed to warn them about the "significant risks" of buying the tokens, and sought to recoup what they paid.

US District Judge Andrew Carter, however, said the investors sued too late, having waited more than one year after their purchases.

He also said domestic securities laws did not apply because Binance was not a domestic exchange, even if it used Amazon computer servers and Ethereum blockchain computers in the United States.

"Plaintiffs must allege more than stating that plaintiffs bought tokens while located in the US and that title passed in whole or in part over servers located in California that host Binance's website," Carter wrote.

Kyle Roche, a lawyer for the investors at Roche Freedman, declined to comment. Binance and its lawyers did not immediately respond to requests for comment.

The investors claimed the statute of limitations began running exactly one year before their April 2020 lawsuit, when the US Securities and Exchange Commission released a "framework" characterising their tokens as securities.

Binance has an opaque corporate structure, with a holding company registered in the Cayman Islands. Founder and Chief Executive Changpeng Zhao said in October that Binance planned to establish "a few headquarters" around the world.

The case is Anderson et al v Binance et al, US District Court, Southern District of New York, No. 20-02803.

A federal judge on Thursday dismissed a lawsuit accusing Binance, the world's largest cryptocurrency exchange by trading volume, of violating US securities laws by selling unregistered tokens and failing to register as an exchange or broker-dealer.

The lawsuit had been brought in Manhattan by digital token investors who had bought nine tokens - EOS, QSP, KNC, TRX, FUN, ICX, OMG, LEND and ELF - through Binance's online exchange starting in 2017, and which soon lost much of their value.

In a 327-page complaint, the investors claimed that Binance "wrongfully engaged in millions of transactions" and failed to warn them about the "significant risks" of buying the tokens, and sought to recoup what they paid.

US District Judge Andrew Carter, however, said the investors sued too late, having waited more than one year after their purchases.

He also said domestic securities laws did not apply because Binance was not a domestic exchange, even if it used Amazon computer servers and Ethereum blockchain computers in the United States.

"Plaintiffs must allege more than stating that plaintiffs bought tokens while located in the US and that title passed in whole or in part over servers located in California that host Binance's website," Carter wrote.

Kyle Roche, a lawyer for the investors at Roche Freedman, declined to comment. Binance and its lawyers did not immediately respond to requests for comment.

The investors claimed the statute of limitations began running exactly one year before their April 2020 lawsuit, when the US Securities and Exchange Commission released a "framework" characterising their tokens as securities.

Binance has an opaque corporate structure, with a holding company registered in the Cayman Islands. Founder and Chief Executive Changpeng Zhao said in October that Binance planned to establish "a few headquarters" around the world.

The case is Anderson et al v Binance et al, US District Court, Southern District of New York, No. 20-02803.

© Thomson Reuters 2022


Can OnePlus 10 Pro beat iPhone 13 Pro and Galaxy S22 Ultra? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.
Affiliate links may be automatically generated - see our ethics statement for details.
Comments

For the latest tech news and reviews, follow Gadgets 360 on Twitter, Facebook, and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel.

Motorola Moto G52 Specifications, Renders Leak Online; Tipped to come with Snapdragon 680 SoC
Share on Facebook Tweet Snapchat Share Reddit Comment google-newsGoogle News

Advertisement

Follow Us

Advertisement

© Copyright Red Pixels Ventures Limited 2022. All rights reserved.