Crypto exchange Binance wins dismissal of US lawsuit alleging digital token sales broke US securities laws
- A US federal judge said investors waited too long to file a lawsuit and that domestic securities laws do not apply to Binance
- Binance, originally based in China, has an opaque corporate structure, with a holding company registered in the Cayman Islands
A federal judge on Thursday dismissed a lawsuit accusing Binance, the world’s largest cryptocurrency exchange by trading volume, of violating US securities laws by selling unregistered tokens and failing to register as an exchange or broker-dealer.
The lawsuit had been brought in Manhattan by digital token investors who had bought nine tokens – EOS, QSP, KNC, TRX, FUN, ICX, OMG, LEND and ELF – through Binance’s online exchange starting in 2017, and which soon lost much of their value.
In a 327-page complaint, the investors claimed that Binance “wrongfully engaged in millions of transactions” and failed to warn them about the “significant risks” of buying the tokens, and sought to recoup what they paid.
US District Judge Andrew Carter, however, said the investors sued too late, having waited more than one year after their purchases.
He also said domestic securities laws did not apply because Binance was not a domestic exchange, even if it used Amazon computer servers and Ethereum blockchain computers in the United States.