Binance is attempting to steer a major class-action lawsuit out of court and into private arbitration, arguing that users agreed to settle disputes outside the judicial system when they signed up for its services. In a recent court filing dated May 16, the global crypto exchange petitioned a federal judge in New York to enforce the arbitration clause embedded in its terms of use—an agreement it claims all plaintiffs accepted.
The lawsuit, which alleges Binance violated securities laws by offering and selling unregistered digital tokens, has become a flashpoint in the ongoing legal battles surrounding crypto regulation in the U.S. Binance maintains that under the company’s 2019 updated terms of service, users consented to both arbitration and a waiver of their rights to participate in class actions.
“The Court should hold that Plaintiffs are required to arbitrate claims that accrued after Feb. 20, 2019,” the filing stated. Binance also emphasized that even if the court decides differently for claims made prior to that date, the 2019 terms—complete with the arbitration mandate and class-action waiver—should apply to all newer claims.
The court has already been involved in earlier decisions regarding the case. In March, Judge Andrew Carter declined Binance’s request to compel arbitration for claims tied to token purchases made between April 1, 2017, and February 20, 2019. He partially delayed a ruling on claims that took place after February 2019, pending further clarification on how the updated terms should be interpreted.
Binance argues that users were adequately informed about the potential for the platform’s terms to change. The original version of its terms included a clause stating the company could revise its agreement at any time—without sending individual notifications. According to Binance, this provision was prominently featured and thus should hold legal weight.
This latest arbitration push follows a complex legal history. The case was initially thrown out by Judge Carter in March 2022. Binance successfully argued at the time that it wasn’t subject to U.S. securities laws due to its lack of a physical headquarters within the country. However, that dismissal was overturned by the U.S. Court of Appeals for the Second Circuit in March 2024, and the U.S. Supreme Court refused to review the case earlier this year, allowing the appeals court’s ruling to stand.
The crypto giant’s troubles with regulators haven’t been limited to civil litigation. In a separate case, the Securities and Exchange Commission (SEC) launched a sweeping lawsuit against Binance in mid-2023, accusing the exchange of offering unregistered securities. That case was ultimately resolved in a staggering $4.3 billion settlement in November 2023.
Binance’s legal headaches aren’t restricted to the U.S., either. In April 2024, the exchange found itself facing a new class-action lawsuit in Canada. The complaint, filed shortly after Binance exited the Canadian market in May 2023, alleges similar securities violations, highlighting the company’s ongoing global regulatory challenges.
As Binance continues to fend off lawsuits and regulatory scrutiny on multiple fronts, the outcome of this arbitration dispute could set a precedent. If the court upholds Binance’s arbitration clause and class-action waiver, other crypto exchanges may follow suit, rewriting their user agreements to limit exposure to public litigation. For now, the judge’s decision on the applicability of the arbitration clause remains one of the most closely watched developments in the evolving legal landscape of cryptocurrency.
