TL; DR Breakdown
- Class action lawsuit against Binance dismissed
- Investors claimed the exchange sold unregistered securities
- Judge says the filing of the lawsuit was late
In the last few years, Binance has been somewhat a figure that has been reconciled with controversies due to so many issues. However, things like that are changing for the crypto exchange with this latest revelation. According to reports, a judge in a federal US court has dismissed a class-action lawsuit against the parent company of the crypto exchange.
Investors claimed Binance sold unregistered securities
According to the full reports, the case was dismissed because Binance had not broken any law by not registering with the SEC before offering services to its users. The class action claimed that Binance had sold unregistered securities to traders between 2017 and 2018. The first complaint filed in New York was among investors who claimed that they invested in nine tokens, including BNT, in the same time duration.
However, another complaint was filed with the complainants eliminating some tokens from the list of assets. According to the investors, the price of the tokens dipped drastically after they bought them from the crypto exchange. At the time, they prayed the court to mandate Binance to return their funds and the small fees they were charged as transaction fees on the crypto exchange.
Judge says the filing of the lawsuit was late
The complainants claimed that Binance rode on the wave that digital assets brought into the market to woo investors off their funds. They also claimed that the exchange helped ICOs and other crypto projects lure in users and charged them fees in return. They claimed that investors who purchased the tokens expected them to bring in a considerable amount of returns, one which did not happen for a long time during the period.
In his verdict, the Judge mentioned that the investors were too late with their complaint as they delayed it for about a year before filing. Even though the better part of the tokens involved was bought in 2018, the investors filed the lawsuit early in April 2020. The investors claimed that owing to the SEC recognizing the assets as securities in the same period, the timeline to file a lawsuit should have begun then.
However, the Judge discovered that the said timeline started when the issue started, not when they discovered it. The court also claimed that the securities law does not cover Binance because it doesn’t have a physical office in the country. Although the exchange has a domain hosting its web services in the country, it was not enough to convict the Changpeng Zhao-led investment. Coinbase has also suffered a lawsuit as far back as March 11, with investors claiming that the exchange is selling unregistered securities.