Binance in Trouble Again; Faces Revived Lawsuit Over Alleged Securities Violations
The post Binance in Trouble Again; Faces Revived Lawsuit Over Alleged Securities Violations appeared first on Coinpedia Fintech News
In a biggest legal twist, the 2nd US Circuit Court of Appeals in Manhattan has breathed new life into a lawsuit against Binance, the world’s leading cryptocurrency exchange. Investors have accused Binance of violating US securities laws by selling unregistered tokens, resulting in substantial losses for investors.
The lawsuit claims that investors lost money because Binance sold tokens that weren’t properly registered. The court says once you buy a token, you can’t cancel it in the US, so it falls under US securities laws. Binance refuses such claims as they are outside the US territory.
It’s a showdown with big implications for crypto investors worldwide!
Applicability of US Securities Laws
According to the Reuters report, the appeals court, in a unanimous 3-0 decision, upheld the investors’ claims, asserting that domestic securities laws were applicable. The court reasoned that once investors paid for the tokens, their purchases became irreversible within the United States. Notably, the court highlighted Binance’s use of domestic Amazon computer servers to host its platform as a crucial factor supporting this decision.
Claims and Token Purchases Still in Question!
The lawsuit is focused on investors who bought seven tokens—ELF, EOS, FUN, ICX, OMG, QSP, and TRX—on Binance beginning in 2017 and then saw significant drops in their value. Allegations have been made by investors against Binance for not providing sufficient warning about the risks involved, as they aim to recoup their initial investments.
Binance Claims Contested
Since Binance’s exchange is not in the US, the company has always said that US securities rules don’t apply to its business. But the new lawsuit disputes this claim, which brings the attention back to the claimed violations and Binance’s responsibility under US law.
In response to a lawsuit, Binance cited a 2010 Supreme Court ruling to limit the application of US securities laws outside the country. Binance and its lawyers didn’t immediately respond to requests for comment. Meanwhile, Jordan Goldstein, representing the plaintiffs, welcomed the court’s recognition of their case’s strength.
This case is unrelated to Binance’s recent admission of guilt and hefty penalty for violating anti-money laundering laws. Binance’s founder, Changpeng Zhao, admitted to related money laundering charges and stepped down as CEO. His sentencing is set for April 30. The case is known as Lee et al v Binance et al, currently before the 2nd US Circuit Court of Appeals and the US District Court, Southern District of New York.
Binance’s Situation in Nigeria
Apart from the US, Binance faces intensified scrutiny from the Central Bank of Nigeria (CBN). The exchange recently dropped the Nigerian naira from its peer-to-peer trading platform. Despite reports suggesting a hefty fine imposed on Binance, Bayo Onanuga, a Special Adviser to the Nigerian President, officially denied such claims.
Read More
Binance in Trouble Again; Faces Revived Lawsuit Over Alleged Securities Violations
The post Binance in Trouble Again; Faces Revived Lawsuit Over Alleged Securities Violations appeared first on Coinpedia Fintech News
In a biggest legal twist, the 2nd US Circuit Court of Appeals in Manhattan has breathed new life into a lawsuit against Binance, the world’s leading cryptocurrency exchange. Investors have accused Binance of violating US securities laws by selling unregistered tokens, resulting in substantial losses for investors.
The lawsuit claims that investors lost money because Binance sold tokens that weren’t properly registered. The court says once you buy a token, you can’t cancel it in the US, so it falls under US securities laws. Binance refuses such claims as they are outside the US territory.
It’s a showdown with big implications for crypto investors worldwide!
Applicability of US Securities Laws
According to the Reuters report, the appeals court, in a unanimous 3-0 decision, upheld the investors’ claims, asserting that domestic securities laws were applicable. The court reasoned that once investors paid for the tokens, their purchases became irreversible within the United States. Notably, the court highlighted Binance’s use of domestic Amazon computer servers to host its platform as a crucial factor supporting this decision.
Claims and Token Purchases Still in Question!
The lawsuit is focused on investors who bought seven tokens—ELF, EOS, FUN, ICX, OMG, QSP, and TRX—on Binance beginning in 2017 and then saw significant drops in their value. Allegations have been made by investors against Binance for not providing sufficient warning about the risks involved, as they aim to recoup their initial investments.
Binance Claims Contested
Since Binance’s exchange is not in the US, the company has always said that US securities rules don’t apply to its business. But the new lawsuit disputes this claim, which brings the attention back to the claimed violations and Binance’s responsibility under US law.
In response to a lawsuit, Binance cited a 2010 Supreme Court ruling to limit the application of US securities laws outside the country. Binance and its lawyers didn’t immediately respond to requests for comment. Meanwhile, Jordan Goldstein, representing the plaintiffs, welcomed the court’s recognition of their case’s strength.
This case is unrelated to Binance’s recent admission of guilt and hefty penalty for violating anti-money laundering laws. Binance’s founder, Changpeng Zhao, admitted to related money laundering charges and stepped down as CEO. His sentencing is set for April 30. The case is known as Lee et al v Binance et al, currently before the 2nd US Circuit Court of Appeals and the US District Court, Southern District of New York.
Binance’s Situation in Nigeria
Apart from the US, Binance faces intensified scrutiny from the Central Bank of Nigeria (CBN). The exchange recently dropped the Nigerian naira from its peer-to-peer trading platform. Despite reports suggesting a hefty fine imposed on Binance, Bayo Onanuga, a Special Adviser to the Nigerian President, officially denied such claims.
Read More