The US Supreme Court has chosen not to consider an appeal from Binance and its founder, Changpeng Zhao, regarding a class-action lawsuit implicating the exchange in the illegal sale of unregistered tokens that saw a sharp decline in value. On January 13, the Supreme Court rejected a petition to review a previous ruling that reaffirmed the applicability of US securities laws to Binance, despite its lack of a physical presence in the United States.
A ruling from a lower court in March established that the lawsuit could proceed based on the premise that the transactions occurred on US servers and the purchases were finalized within the country, even though Binance is not an American company. In its appeal, Binance contended that advancements in technology allow investors easier access to international financial markets, asserting that improvements in connectivity enable US residents to engage in trading on foreign platforms.
The class action was initiated in April 2020 by Chase Williams on behalf of investors, who claimed that Binance operated as an unregistered securities exchange or broker-dealer. Following the Supreme Court’s decision on January 13, the lawsuit is now set to advance.
Binance’s challenges in the United States have intensified since mid-2023, when the Securities and Exchange Commission filed a lawsuit against the company and its CEO for offering unregistered securities and unlawfully serving US clients. In November 2023, Binance reached a $4.3 billion settlement with the Department of Justice over violations related to money laundering and terrorism financing laws.
Additionally, the exchange faced a class action lawsuit in Canada in April over purported breaches of securities regulations after it announced its exit from the country in May 2023. Binance is also being pursued by the FTX bankruptcy estate for $1.8 billion in connection with an alleged fraudulent share sale from 2021. Separately, Zhao was implicated in a lawsuit in August 2024 involving allegations of laundering stolen cryptocurrencies. In April, he was sentenced to four months in prison for facilitating money laundering at the exchange and for not enforcing adequate Anti-Money Laundering measures, though he was released in late September.
