The U.S. Supreme Court has declined to review a lower court decision, allowing a class-action lawsuit against Binance and its founder, Changpeng “CZ” Zhao, to proceed. The lawsuit alleges that Binance illegally sold unregistered tokens that subsequently lost significant value. This development means that the case will continue in the lower courts, where investors claim that Binance operated as an unregistered securities exchange or broker-dealer.
In March 2024, a lower court ruled that the class-action lawsuit could proceed, determining that U.S. securities laws applied to Binance despite the exchange not having a physical headquarters in the United States. The court’s decision was based on the fact that token purchases were finalized in the U.S., and transactions occurred on U.S. servers.
Binance appealed this decision, arguing that recent technological advancements have enabled investors to participate in foreign financial markets more easily, and that this interconnectivity allows Americans to trade on foreign exchanges. However, the Supreme Court’s refusal to hear the appeal means that the class-action lawsuit will proceed in the lower courts.
This legal development adds to Binance’s ongoing regulatory challenges in the United States. In mid-2023, the U.S. Securities and Exchange Commission sued Binance and Zhao for selling unregistered securities and illegally servicing U.S. citizens. Additionally, in November 2023, Binance reached a $4.3 billion settlement with the U.S. Department of Justice for violating money laundering and terrorism financing laws.
