In a decision by a federal appeals court on Friday, a lawsuit against Binance was revived. The lawsuit accuses Binance of violating U.S. securities laws by selling unregistered crypto tokens that subsequently plummeted in value.
According to a report, the 2nd U.S. Circuit Court of Appeals in Manhattan ruled 3-0 that investors have plausibly alleged domestic securities laws apply. This is because their purchases of the tokens, including ELF, EOS, FUN, ICX, OMG, QSP, and TRX, became irrevocable transactions within the United States once payment was made.
A key factor was Binance’s use of Amazon web servers located in the U.S. to host its trading platform. Circuit Judge Alison Nathan stated this supported the application of U.S. laws, given that “Binance notoriously denies the applicability of any other country’s securities regulation regime.”
The appeals court decision overturned a March 2022 ruling by a lower court that had dismissed the case. Investors can now pursue claims arising from token purchases made within one year before initially filing suit in 2020.
Jordan Goldstein, representing the plaintiffs, welcomed the appeals court “unanimously acknowledging the strength of our claims” against Binance over the unregistered crypto token sales.
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