Home Altcoins News Supreme Court Rules U.S. Securities Laws Apply to Binance

Supreme Court Rules U.S. Securities Laws Apply to Binance

Binance

The U.S. Supreme Court has made a significant ruling in the ongoing class-action lawsuit against cryptocurrency exchange Binance and its former CEO, Changpeng Zhao (CZ). The court has declined to review a decision by the U.S. Court of Appeals for the Second Circuit, which affirmed that U.S. securities laws apply to Binance, despite the company’s lack of a physical office in the United States.

This ruling is a crucial development in the legal battle between Binance and U.S. regulators, particularly in the context of whether Binance should be subject to U.S. securities regulations given its provision of services to American clients without a formal U.S. headquarters.

The Case Against Binance: Securities Violations

The legal case stems from accusations by investors who claim that Binance sold unregistered securities without proper registration, violating the Securities Act of 1933. The plaintiffs argue that Binance sold digital tokens that later lost significant value, making their transactions legally questionable.

Binance, in response, has contested these claims, asserting that it should not be subject to U.S. jurisdiction because it does not maintain a physical presence in the country. The company also argued that technological advancements have enabled global access to financial markets, meaning its operations should not be regulated by U.S. securities laws.

However, the U.S. Court of Appeals for the Second Circuit ruled in March 2024 that despite Binance’s lack of an office in the U.S., the company must comply with U.S. securities laws because the transactions in question were processed through servers located within the country. This ruling has now been confirmed by the Supreme Court’s decision to allow the case to proceed.

The Supreme Court’s Decision

In its latest move, the U.S. Supreme Court has declined to review the appellate court’s ruling, effectively clearing the way for the lawsuit to proceed under U.S. securities regulations. This ruling is a significant win for the plaintiffs, as it means Binance will have to face legal proceedings under U.S. law, despite its international operations.

The case will now move forward with Binance being held accountable for its actions related to U.S. investors, potentially setting a precedent for other foreign companies offering services to U.S. citizens and residents without maintaining a physical presence in the country.

Binance’s Ongoing Legal Troubles

This case is just one of several ongoing legal challenges for Binance. In mid-2023, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance and Changpeng Zhao, accusing the company of offering illegal services to U.S. customers. The SEC claims Binance violated multiple securities laws by facilitating the trading of unregistered securities.

Additionally, in November 2023, Binance faced even more legal challenges when it reached a settlement with the U.S. Department of Justice, agreeing to pay a hefty $4.3 billion to resolve charges related to money laundering and terrorism financing violations. These issues have continued to plague the company, raising concerns over its operations both in the U.S. and abroad.

Beyond the U.S., Binance is also facing legal issues in other countries. In April 2023, the company faced a class-action lawsuit in Canada, accusing it of violating securities laws following its decision to exit the Canadian market.

Global Implications for Cryptocurrency Regulation

The ruling on Binance’s case has broader implications for the cryptocurrency industry, particularly regarding the jurisdictional reach of U.S. securities laws. With the rise of global cryptocurrency exchanges operating without traditional physical offices, this case could set a precedent for how regulators in the U.S. and other countries approach the legal responsibilities of cryptocurrency platforms that serve international users.

For Binance, the legal battles appear far from over, as the company faces increased scrutiny from regulators around the world. As the case proceeds, industry stakeholders will be watching closely to see how it may shape the regulatory landscape for cryptocurrencies going forward.

Conclusion

The U.S. Supreme Court’s decision to allow the class-action lawsuit against Binance to proceed under U.S. securities laws marks a significant step in the legal and regulatory oversight of cryptocurrency exchanges. With Binance’s ongoing legal troubles in the U.S. and abroad, the outcome of this case could have far-reaching consequences for the future of cryptocurrency regulation, potentially affecting how global exchanges operate and comply with local laws.

Read more about:
Share on

Maheen Hernandez

A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies. Appreciate the work? Send a tip to: 0x75395Ea9a42d2742E8d0C798068DeF3590C5Faa5

Crypto newsletter

Get the latest Crypto & Blockchain News in your inbox.

By clicking Subscribe, you agree to our Privacy Policy.

Get the latest updates from our Telegram channel.

Telegram Icon Join Now ×