A federal appeals court ruled last week that Binance faces a class action lawsuit from a group of U.S.-based crypto investors who claim the exchange allows the buying and selling of unregistered securities in the form of certain cryptocurrencies. It was decided that it was necessary. Although the decision does not rule on whether tokens are actually securities, it still has important implications for a wide range of securities litigation.
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Ann The appellate court was reinstated Last week, a district judge erred in dismissing a purported class action lawsuit filed by a group of crypto investors against Binance after the statute of limitations had passed, saying it was filed in the wrong jurisdiction. It was decided that
Binance has argued for years that its headquarters are located in the middle of nowhere, but appeals court judges found this argument unpersuasive. The justices ruled that domestic securities laws continue to apply to transactions on exchanges based outside the United States, which has far-reaching implications (e.g., ). It is also worth noting that this is an appellate court decision, giving it more weight (as a precedent) than a mere district court decision.
last week, The Court of Appeals ruled Cryptocurrency exchanges may still be subject to U.S. law even if they claim they are not based in the U.S. if they have sufficient ties to the U.S. Global cryptocurrency exchange Binance The exchange has changed its position in a purported class action lawsuit filed against The three judges decided that the amount was enough for the crypto investor group to have sufficient standing to sue the exchange.
There were two main aspects to this judgment. One is about timeliness, and the other is about extraterritoriality (a word I haven't been able to pronounce so far).
Justices Pierre N. Leval, Denny Chin and Alison J. Nathan applied another case law, Morrison v. National Australia Bank, in which the key factors were where the user made the transaction, where the payment was made and where the user made the payment. He said that it depends on where the transaction took place. Terms of Use – For the plaintiffs in this case, that is within various states of the United States.
“First, Plaintiffs properly argued that their claims involved domestic transactions because they became irrevocable in the United States and were therefore subject to our securities laws,” the judges wrote. . “Second, Plaintiffs' federal claims are timely insofar as they relate to transactions that occurred in the year prior to filing the lawsuit, because all of their federal claims require completed transactions and therefore cannot occur before the plaintiffs' claims and the state whose law governs the claims of the putatively absent class participants. The district court's conclusion that there was a connection was premature.”
The fact that the plaintiffs had no jurisdiction other than the United States to sue also seemed to strengthen the judges' argument. And similar arguments support the role of state law claims, the justices wrote.
“We conclude that at this early stage in the litigation, plaintiffs plausibly alleged that matching took place in the United States,” the decision said.
Binance attempted to argue that Binance is a decentralized exchange and therefore U.S. courts lack jurisdiction. The judges disagreed. It added that the plaintiffs also made a convincing case that the token orders were placed in the United States because of the location of Binance's servers.
“We believe that the complaint plausibly alleges that matching occurred on 'the infrastructure that Binance relies on to operate its exchange,' in this case Amazon Web Services servers located in California. “We conclude that,” the judgment states.
The justices also ruled that the plaintiffs plausibly argued that they filed their lawsuit within the statute of limitations, and that a lawsuit cannot begin until they actually purchase the tokens in question.
SEC attorney Already submitted The ruling comes as a supplementary authority in the regulator's own Binance lawsuit challenging arguments made by Binance and founder Changpeng Chao in support of the motion to dismiss.
“Binance and Zhao cited the District Court’s dismissal of Anderson v. Binance, a private securities class action lawsuit against them, in support of their claims to dismiss here,” the filing states, and the opinion is added as evidence.
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