Crypto exchange Binance wins dismissal of U.S. lawsuit over digital token sales

By Jonathan Stempel

NEW YORK (Reuters) – A federal choose on Thursday dismissed a lawsuit accusing Binance, the world’s largest cryptocurrency exchange by buying and selling quantity, of violating U.S. securities legal guidelines by promoting unregistered tokens and failing to register as an exchange or broker-dealer.

The lawsuit had been introduced in Manhattan by digital token buyers who had purchased 9 tokens – EOS, QSP, KNC, TRX, FUN, ICX, OMG, LEND and ELF – by way of Binance‘s on-line exchange beginning in 2017, and which quickly misplaced a lot of their worth.

In a 327-page criticism, the buyers claimed that Binance “wrongfully engaged in hundreds of thousands of transactions” and did not warn them in regards to the “important dangers” of shopping for the tokens, and sought to recoup what they paid.

U.S. District Choose Andrew Carter, nevertheless, stated the buyers sued too late, having waited a couple of yr after their purchases.

He additionally stated home securities legal guidelines didn’t apply as a result of Binance was not a home exchange, even when it used Amazon pc servers and Ethereum blockchain computer systems in the USA.

“Plaintiffs should allege greater than stating that plaintiffs purchased tokens whereas situated within the U.S. and that title handed in entire or partially over servers situated in California that host Binance‘s web site,” Carter wrote.

Kyle Roche, a lawyer for the buyers at Roche Freedman, declined to remark. Binance and its attorneys didn’t instantly reply to requests for remark.

The buyers claimed the statute of limitations started working precisely one yr earlier than their April 2020 lawsuit, when the U.S. Securities and Exchange Fee launched a “framework” characterizing their tokens as securities.

Binance has an opaque company construction, with a holding firm registered within the Cayman Islands. Founder and Chief Government Changpeng Zhao stated in October that Binance deliberate to determine “a number of headquarters” world wide.

The case is Anderson et al v Binance et al, U.S. District Court docket, Southern District of New York, No. 20-02803.

(Reporting by Jonathan Stempel in New York; Modifying by Nick Zieminski)