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Binance, one of the world’s largest cryptocurrency exchanges, will face a class-action lawsuit in the United States after the Supreme Court declined to hear its appeal for dismissal. The case, filed by investor Chase Williams in 2020, accuses Binance and its founder, Changpeng “CZ” Zhao, of selling unregistered securities and operating without proper licensing in the US.
The lawsuit claims Binance facilitated the sale of tokens classified as securities without registering as a securities exchange or broker-dealer. Though Binance does not have a physical base in the US, the case argues that transactions were completed on American soil via US-based servers, bringing the exchange under US securities laws.
In March 2023, a lower court ruled that US securities laws apply in this context, allowing the case to move forward. Binance challenged this decision, arguing that modern technology enables Americans to access foreign markets without subjecting those markets to US regulations. However, the Supreme Court’s refusal to hear the appeal leaves the earlier ruling intact.
The class-action lawsuit is just one of many legal battles Binance and its founder are dealing with. In late 2023, Binance reached a $4.3 billion settlement with the US Department of Justice over violations related to money laundering and terrorism financing.
In addition to US cases, Binance faces legal issues in Canada and from the FTX bankruptcy estate. The claims range from securities violations to fraudulent business practices.
Zhao, Binance’s founder, has also been personally implicated. Earlier in 2024, he pleaded guilty to charges of enabling money laundering through the exchange and received a four-month prison sentence. Although Zhao was released in September, his legal troubles have contributed to growing scrutiny of Binance’s compliance and operational practices