Judge Rejects Binance's Arbitration Bid in Token Sale Lawsuit

A federal judge dismissed Binance's attempt to demand arbitration in a lawsuit filed by customers claiming illegal sales of unregistered tokens. The judge ruled that Binance failed to inform customers adequately about arbitration terms. The lawsuit revives claims against Binance founder Changpeng Zhao.

A federal judge ruled against Binance's request for arbitration in a case alleging it sold unregistered securities. Customers contend losses from tokens bought that Binance illegally sold.

U.S. District Judge Andrew Carter found Binance's terms didn't clearly notify users about arbitration clauses, permitting claims before February 2019 to proceed in court. The judge criticized a lack of evidence regarding announcements of these provisions in Binance's terms. After Binance's initial success in dismissing the case in 2022, an appeals court reversed the decision, reigniting the lawsuit.

Binance's spokesperson declared the case baseless and reiterated the company's intent to defend itself vigorously. CEO Changpeng Zhao, also named in the lawsuit, has not commented. Arbitration is often favored by defendants for its confidentiality and potential cost savings.