A group of investors aiming to initiate legal action against cryptocurrency exchange Binance, its former CEO Changpeng Zhao, and other executives have been granted a renewed opportunity to pursue their case.
The Second Circuit Court of Appeals recently overturned a previous ruling by a lower court that had dismissed the lawsuit. This reversal permits the putative class action to move forward against the world’s largest cryptocurrency exchange.
Originally filed in April 2020, the lawsuit was instigated by a collective of cryptocurrency investors who asserted that they had procured securities, such as ERC-20 tokens like EOS, TRX, ELF, FUN, ICX, OMG, and QSP, from Binance.
Notably, the EOS token, issued by Block.One, is linked to Bullish, which serves as the parent company of CoinDesk—CoinDesk, in turn, is the parent company of Binance.
A recent ruling overturns the previous dismissal decision.
In May 2022, Judge Andrew Carter from the Southern District of New York threw out the case, citing that the plaintiffs had lodged the lawsuit after the statute of limitations had lapsed.
Furthermore, Judge Carter determined that Binance, being a foreign exchange, lacked adequate connections within the United States to satisfy the criteria of federal securities laws.
However, the recent decision by the Second Circuit Court of Appeals overturned Judge Carter’s ruling and remanded the case back to the district court.
The appeals court determined that the plaintiffs had plausibly alleged that the transactions involving the assets in question were carried out on servers within the United States and that they had accessed Binance from the U.S. Additionally, the ruling challenged Binance’s previous assertions of lacking a headquarters or physical presence.
Regarding the issue of timeliness, the circuit court clarified that the statute of limitations clock did not commence until the plaintiffs purchased the tokens, which occurred within a year of filing the lawsuit.
It’s important to note that the recent decision only applies to seven of the tokens mentioned in the original complaint. Furthermore, the ruling does not establish whether the tokens in question qualify as securities.
If the case is not further appealed and returns to the district court, the parties will have the opportunity to debate whether the tokens meet the definition of securities. Binance retains the option to appeal to the U.S. Supreme Court.
If Binance opts not to appeal or if the Supreme Court declines to hear the appeal, the district court will regain jurisdiction over the case.
Binance withdraws from the Nigerian market following regulatory scrutiny.
Binance faces a new challenge as it recently halted all services involving the Nigerian local fiat currency, the Nigerian naira (NGN), following increased regulatory scrutiny.
The world’s largest cryptocurrency exchange announced last week that it would suspend NGN withdrawals after March 8.
Earlier, the Nigerian government imposed a significant $10 billion fine on Binance as part of its crackdown on the platform in an attempt to stabilize the nation’s local currency.
The Nigerian government’s actions against Binance and other cryptocurrency firms are rooted in concerns over ongoing manipulation of the forex market and illicit movement of funds.
Authorities believe that these activities have contributed to the depreciation of the naira. This move highlights the escalating regulatory challenges faced by cryptocurrency exchanges operating in Nigeria.
