Binance Faces Reinstated Lawsuit Over Token Sales

Binance contends that U.S. securities laws don’t apply due to its location outside the U.S.

A federal appeals court has reinstated the lawsuit that was filed against the cryptocurrency exchange Binance.

The lawsuit, in which investors claimed Binance violated U.S. securities laws by selling unregistered tokens, was renewed, according to a March 8 Reuters report. The document indicates that investors asserted that the exchange sold tokens that experienced a significant depreciation.

Additionally, the appeals court ruled that investors may file claims about purchases completed within the previous year of the lawsuit’s filing.

Seven tokens that investors purchased via the cryptocurrency exchange beginning in 2017—aelf (ELF), EOS (EOS), FUNToken (FUN), Icon (ICX), OMG Network (OMG), Quantstamp (QSP), and Tron (TRX)—shortly after that lost the majority of their value.

Conversely, representatives of the cryptocurrency exchange assert that, due to the exchange’s location outside the United States, U.S. securities laws do not apply.

Before the recent investor litigation, Binance had encountered difficulties in the country. A court authorized Binance’s plea agreement for violating anti-money laundering laws, in which it is obligated to pay $4.3 billion at the end of February.

The cryptocurrency exchange was subject to U.S. laws but made a “deliberate decision” not to comply with them, according to District Judge Richard Jones.

After the cryptocurrency exchange was accused of serving clients from sanctioned countries, terrorist organizations, and drug traffickers in violation of U.S. law, the agreement was subsequently approved.

Binance’s Compliance Issues and Leadership Change

Binance’s founder and current CEO, Changpeng Zhao, acknowledged his and the company’s guilt.

Formerly in charge of all regional markets beyond the United States, Richard Teng assumed the role of CEO of the cryptocurrency exchange.