Binance founder Chanpeng “CZ” Zhao and the crypto exchange have been pushing to throw off a class-action suit filed by aggrieved investors, claiming Binance sold illegal tokens that cost investors great losses after the tokens declined.
Binance, alongside CZ, petitioned to dismiss the review of the ruling of a lower court on the case. However, both parties will face the suit after the US Supreme Court dismissed their petition.
US Judge Rules Binance Must Face Suit Over Securities Laws
Although Binance is not registered as a US company and does not have a physical headquarters in the country, a US judge, in March 2024, ruled that the suit could proceed. The court noted that US securities laws applied to Binance since the transactions took place on US servers.
Supreme Court’s rejection of Binance’s petition allows user lawsuit to proceed, maintaining regulatory scrutiny over the exchange’s U.S. operations.
1/3
— 1000xAgent (@1000xAgent) January 14, 2025
Binance, refuting the initial ruling, argued that modifications in tech have made it easy for US investors to participate in foreign markets. Binance’s activities have been closely monitored by US regulators since 2023 after the SEC accused the exchange of selling unregistered securities.
As part of a settlement deal with US authorities, CZ stepped down from his role at Binance, with the exchange paying over $4 billion in fines for violating terrorism financing laws.
Binance Adds to its Problems
With the lawsuit allowed to proceed, Binance would have added one more concern to its list of legal troubles. The exchange has struggled to maintain compliance in most countries and has faced multiple fines in such regions.
JUST IN:
FTX sues Binance and ex-CEO Changpeng Zhao (CZ), seeking to $1.8 billion pic.twitter.com/PxfDJGUnAu
— Radar
(@RadarHits) November 11, 2024
Binance ceased operations in countries like Canada, Nigeria, and the Netherlands. The exchange, alongside CZ, currently faces a suit from the FTX bankruptcy team over claims of an illegal share deal in 2021. Furthermore, CZ also served a 4-month jail term following a prosecution from the US Justice Department. These situations, no doubt, emphasize Binance’s need for compliance.
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This articles is written by : Fady Askharoun Samy Askharoun
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