A group of investors aiming to sue Binance, its former CEO Changpeng Zhao, and other executives have received a renewed opportunity to proceed with their legal action. The Second Circuit Court of Appeals overturned a previous dismissal of the lawsuit, enabling the class action against the world’s largest cryptocurrency exchange to move forward.
Initially filed in April 2020, the lawsuit was initiated by crypto investors who alleged purchasing securities, including ERC-20 tokens such as EOS, TRX, ELF, FUN, ICX, OMG, and QSP, from Binance. The lawsuit raised concerns about Binance’s ties to Block.One, the issuer of the EOS token, which is associated with Bullish, the parent company of CoinDesk and Binance.
In May 2022, Judge Andrew Carter of the Southern District of New York dismissed the case, citing statute of limitations issues and Binance’s lack of substantial connections to the United States. However, the recent ruling by the Second Circuit Court of Appeals overturned this decision, highlighting plausible claims of U.S.-based transactions and challenging Binance’s assertions regarding its operational headquarters.
The court ruled that the statute of limitations didn’t commence until the plaintiffs acquired the tokens, which occurred within a year of filing the lawsuit. It’s important to note that the recent ruling only pertains to seven of the tokens listed in the original complaint, and it doesn’t establish the securities status of these tokens.
Binance’s legal challenges come amidst regulatory scrutiny, particularly in Nigeria, where the exchange suspended services involving the Nigerian naira (NGN) following government fines and concerns over forex market manipulation and fund movement contributing to the devaluation of the nation’s currency.