Bad News for Binance and Changpeng Zhao from the U.S. – At Least 7 Altcoins Involved

The U.S. Supreme Court has declined to hear Binance’s appeal to dismiss a lawsuit accusing the cryptocurrency exchange and its founder Changpeng Zhao of illegally selling unregistered tokens that later lost significant value. The ruling allows the class-action lawsuit filed by investors to proceed in lower courts. The investors claim that Binance failed to warn them about the risks of purchasing tokens such as ELF, EOS, FUN, ICX, OMG, QSP, and TRX, which were sold through the platform starting in 2017. They are seeking compensation for their losses, claiming that the tokens were sold in violation of U.S. securities laws. The 2nd U.S. Circuit Court of Appeals in Manhattan previously ruled in March 2024 that U.S. securities laws could apply to Binance despite the company not being based in the U.S. The court noted that token purchases become irreversible in the U.S. once payments are made and noted that Binance uses local servers hosted by Amazon. Binance, which was founded in China, argued that its operations should not be subject to U.S. securities laws because of its international status. It cited a 2010 Supreme Court decision in Morrison v. National Australia Bank that limited the extraterritorial reach of U.S. securities laws. However, the Second Circuit’s decision allowed the case to proceed, stating that certain aspects of the transactions occurred domestically. Related News: BREAKING: And It Happened - Coinbase Announces That It Will Finally List The Hugely Popular Memecoin Binance argued in its appeal that the Second Circuit misapplied the Morrison precedent, arguing that the decision set a precedent to extend U.S. securities laws to foreign trading platforms like Binance.com. The company also said the case raises a question of “global importance” to international financial markets. This case is different from the one Binance was found guilty of violating money laundering and sanctions laws in November 2023 and fined $4.3 billion. In that case, Zhao was sentenced to four months in prison and released in September 2024. *This is not investment advice. Continue Reading: Bad News for Binance and Changpeng Zhao from the U.S. – At Least 7 Altcoins Involved