Binance, the world’s largest cryptocurrency exchange, has asked a U.S. court to dismiss a class action lawsuit filed by American investors, citing an arbitration clause in its user agreement.
The motion was submitted on Friday, marking the latest legal maneuver by the company as it continues to face regulatory and legal pressure in the United States.
The class action, filed earlier this year in the Northern District of California, accuses Binance of violating securities laws by offering and promoting unregistered crypto tokens.
The plaintiffs also allege that Binance misled investors about the safety and regulatory status of certain assets listed on its platform.
Binance Seeks Dismissal Based on Arbitration Clause
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, which requires disputes to be resolved privately rather than in court.
The clause, the company claims, 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 argues users agree to arbitrate all claims by accepting the terms of service Source: Law360.com“Plaintiffs who accepted the 2019 terms agreed to arbitrate all claims arising on or after Feb. 20, 2019,” Binance said. It also claimed that its earlier terms already allowed unilateral amendments without notifying individual users, suggesting those users should be bound retroactively.
Global Legal Heat Continues as Arbitration Strategy Comes Under Scrutiny
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 Canada, where a class action lawsuit was filed in April 2024 over alleged securities law violations following its exit from the market in 2023.
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