Binance Seeks Dismissal of U.S. Class Action Lawsuit Citing Arbitration Clause

Binance, the world’s largest cryptocurrency exchange, has filed a motion in a U.S. court to dismiss a class action lawsuit brought by American investors. The company is citing an arbitration clause in its user agreement as the basis for this request. This legal maneuver comes as Binance continues to face regulatory and legal challenges in the United States.

The class action lawsuit, filed earlier this year in the Northern District of California, alleges that Binance violated securities laws by offering and promoting unregistered crypto tokens. Additionally, the plaintiffs claim that Binance misled investors about the safety and regulatory status of certain assets listed on its platform.

On March 28, U.S. District Judge Andrew L. Carter Jr. ruled that Binance could not force arbitration for users who purchased tokens between April 1, 2017, and February 20, 2019, prior to the implementation of its amended terms of use. For users who bought tokens after that date but before receiving actual notice of the arbitration clause, the judge also denied Binance’s motion, but without prejudice. He then vacated that decision on April 16, allowing both parties to file additional briefs on the issue.

In its motion to dismiss, Binance argues that its user agreement includes a binding arbitration clause and a class action waiver. This clause requires disputes to be resolved privately rather than in court. Binance claims that the clause was clearly disclosed and agreed to by users at the time of account registration. “Each Plaintiff agreed to resolve any disputes through binding arbitration governed by the rules of the Hong Kong International Arbitration Centre,” Binance’s legal team stated in the filing. The exchange further emphasized that the plaintiffs’ claims fall squarely within the scope of the arbitration clause.

Binance also argued that its earlier terms already allowed unilateral amendments without notifying individual users, suggesting those users should be bound retroactively. This legal dispute stems from a broader class action initially dismissed in 2022, when Judge Carter sided with Binance’s argument that it was not subject to U.S. securities laws due to its offshore status. That decision was overturned in March 2024 by the Second Circuit Court of Appeals, and the Supreme Court declined to hear Binance’s appeal in January.

Beyond this case, Binance continues to face mounting legal pressures globally. In the U.S., it settled with regulators in November 2023 for $4.3 billion over allegations of selling unregistered securities and failing to maintain proper compliance controls. Founder Changpeng Zhao pleaded guilty to a related criminal charge and agreed to a $150 million personal settlement, while Binance paid $2.7 billion to the Commodity Futures Trading Commission (CFTC).

Binance’s legal troubles have also spread to other regions, where a class action lawsuit was filed in April 2024 over alleged securities law violations following its exit from the market in 2023. This ongoing legal battle highlights the complex regulatory landscape that cryptocurrency exchanges must navigate, as well as the potential challenges posed by arbitration clauses in user agreements. The outcome of this case could have significant implications for the broader cryptocurrency industry, particularly in how disputes are resolved and the extent to which offshore exchanges can avoid U.S. legal jurisdiction.