Binance Fails to Convince US Supreme Court to Hear Its Appeal in Crypto Lawsuit

The lawsuit, filed in 2020 by a group of Binance investors, claims the crypto exchange failed to warn them about risks associated with several tokens.

Key Takeaways

Binance's effort to block a lawsuit that accuses it of illegally selling crypto assets has hit a roadblock after the US Supreme Court declined to hear its appeal, Bloomberg Law reported.

The lawsuit, filed in 2020, alleges that a group of Binance investors were not warned by the crypto exchange about the risks involved in several tokens, including ELF, EOS, and FUN, which they purchased in 2017. The investors are seeking compensation for their losses, as well as interest and legal costs.

Binance has argued that it should not be subject to US securities laws because it is not a US-based company.

A US district court initially dismissed the case in March 2022, ruling in favor of Binance's argument that US securities laws did not apply because the transactions were considered "extraterritorial" and some claims were filed too late.

But an appeals court later reversed that decision, finding that there was enough evidence to suggest that the transactions were domestic, based on the location of servers and the investors' activities within the US, according to a public document shared by Bloomberg Law.

Following the decision, Binance and its former CEO, Changpeng Zhao, appealed to the Supreme Court. They argued that the 2nd Circuit misapplied the 2010 Morrison v National Australia Bank decision by permitting liability across different stages of securities transactions and countries.