New York Judge Denies Binance’s Motion to Compel Arbitration, U.S. Investor Lawsuit to Proceed to Public Court Hearing

BlockBeats News, February 27, Judge Andrew Carter Jr. of the Southern District of New York Federal Court ruled that Binance has no authority to compel U.S. users to arbitrate losses arising from their purchases of cryptocurrency on its global platform prior to February 20, 2019, and that the related class action will continue to be litigated publicly in federal court.

The judge held that Binance unilaterally updated its terms of use in 2019 to include an arbitration clause without providing adequate individual notice to users. As the 2017 version of the terms did not contain any arbitration or class action waiver provisions, the 2019 amendments could not retrospectively apply to claims arising before that date.

Furthermore, the court also found that the so-called "U.S. class action waiver" in the 2019 terms did not expressly delineate specific terms and was not enforceable in federal court. The case, titled Williams v. Binance, was brought by five U.S. investors from California, Nevada, and Texas, alleging that Binance and its founder Changpeng Zhao (CZ) illegally sold unregistered securities on Binance.com and were not registered as broker-dealers.

The case was dismissed in 2022 and later reinstated by the Second Circuit Court of Appeals in 2024. Binance stated that claims arising after February 20, 2019, have been voluntarily withdrawn by the plaintiffs, and the company will continue to defend against the remaining allegations.