A federal judge dismissed a class action lawsuit alleging that Binance violated U.S. securities laws and sold altcoin projects not registered with the U.S. Securities and Exchange Commission (SEC). Here are the details…
Binance Users Sued for These 12 Altcoins
The initial complaint filed in the U.S. District Court for the Southern District of New York was filed by a group of investors who claimed to have invested in ELF, CVC, EOS, BNT, SNT, QSP, KNC, TRX, FUN, ICX, OMG, LEND tokens in 2017 and 2018. Subsequently, BNT, SMT and CVC were removed from the complaint, and the case concerned the remaining 9 altcoins. Investors stated that the tokens have lost most of their value since their purchase, and are demanding compensation for the price paid for the tokens and the fees paid by Binance in connection with their purchase. The following expressions were used in the complaint:
Binance […] unfairly processed millions of transactions without registering with the SEC as an exchange or broker-dealer. As a result, investors were not informed of the significant risks inherent in these investments, as required by federal and state securities laws.
Investors also claimed that Binance benefited from the enthusiasm generated by cryptocurrencies, marketing tokens, and initial coin offerings (ICOs) on behalf of projects, profiting from associated trading fees and “buying tokens with a reasonable expectation of profit.” Judge Andrew L. Carter said in his decision on Thursday (March 31) that the investors filed the lawsuit too late, because after buying the tokens, they waited more than a year to file a complaint. Most of the tokens were purchased in 2018, and the initial application was submitted only in April 2020.
The judge pointed out that Binance is not based in the USA
Investors argued that then a complaint filing schedule should begin, since in April 2020 the SEC issued a legal framework according to which digital tokens are securities, but Carter found that the relevant laws apply when alleged violations are detected, and not when they are committed. Judge Carter also stated that local securities laws do not apply to Binance because there is no local exchange in the United States headquartered in the Cayman Islands.
This is not the only class action filed against the crypto exchange on such grounds. As Somagnews reported, on March 11, a lawsuit was filed against Coinbase in the same court for allegedly operating as an unregistered securities exchange.