A federal appeals court has reportedly reversed the dismissal of a lawsuit accusing crypto exchange Binance of violating US securities laws by selling unregistered tokens.
In March 2022, District Judge Andrew Carter threw out a class action lawsuit filed by crypto investors who used Binance to purchase tokens that ultimately witnessed a massive price drop.
The crypto investors started collecting the tokens through Binance in 2017 inclusive aelf (ELF), EOS (EOS), FUNToken (FUN), ICON (ICX), OMG Network (OMG), Quantstamp (QSP), LEND, Kyber Network Crystal (KNC) and Tron (TRX). The plaintiffs wanted to recoup their investments, saying the world’s largest crypto exchange failed to warn them of the significant risks of buying the crypto assets.
But Judge Carter ruled in Binance’s favor, saying domestic securities laws did not apply because Binance is not a domestic exchange. He also said the investors failed to act in a timely manner as they filed the lawsuit about a year after the purchase.
Reuters now reports that the 2nd US Circuit Court of Appeals in Manhattan will revive the lawsuit.
In a 3-0 decision, the appeals court said domestic securities laws applied in the case because the token purchases in the US had become irreversible after the payment was made. The court also rules that Binance is dependent on Amazon domestic computer servers to host its platform.
Circuit Judge Alison Nathan says Binance “infamously denies the applicability of the securities regulatory regime of any other country.”
The appeals court added that investors can still try to recoup their capital if they invested a year before the trial.
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