US Supreme Court Rejects Binance’s Appeal to Avoid Crypto Lawsuit

Lawsuit Against Binance Proceeds

The U.S. Supreme Court has declined to hear Binance’s appeal to dismiss a lawsuit brought by investors accusing the cryptocurrency exchange of illegally selling unregistered tokens. The decision leaves in place a ruling by the 2nd U.S. Circuit Court of Appeals that allows the case to proceed under U.S. securities laws.

The lawsuit claims Binance and its founder, Changpeng Zhao, failed to warn investors about the risks associated with tokens sold on its platform, including ELF, EOS, FUN, ICX, OMG, QSP, and TRX.

Legal Argument and Jurisdiction

Binance argued that U.S. securities laws should not apply since the company is not based in the United States. However, the 2nd Circuit Court ruled that domestic securities laws could apply because token transactions became irrevocable in the U.S. when investors paid for them.

The appeals court cited Binance’s use of U.S.-based Amazon servers as a factor in determining jurisdiction, a key element in its March 2024 ruling.

Binance’s Supreme Court Appeal

In its appeal to the Supreme Court, Binance claimed the lower court misinterpreted the 2010 Morrison v. National Australia Bank decision, which limits the extraterritorial reach of U.S. securities laws. Binance argued the 2nd Circuit’s decision improperly expanded liability to multiple stages of transactions and across international borders.

The company also highlighted the global implications of the case, stating it raises questions about the application of U.S. securities laws to foreign trading platforms.

Investor Claims

The proposed class-action lawsuit alleges that Binance sold tokens starting in 2017 without adequately warning investors about their risks. The plaintiffs are seeking to recover the amounts they paid for these tokens, many of which lost significant value over time.

Binance’s Global Presence Under Scrutiny

Founded in China, Binance has faced questions about its regulatory status and operations worldwide. Despite years of expansion, Binance CEO Richard Teng told Reuters in December 2024 that the company had not yet decided on a permanent global headquarters.