Binance Arbitration Push Blocked by Manhattan Federal Judge

A recent court ruling has dealt a blow to Binance's efforts to shift US investor claims related to token losses prior to February 20, 2019, into private arbitration.

The decision by a Manhattan federal judge underscores the need for cryptocurrency exchanges to provide conspicuous and individualized notice when updating their terms of service. This requirement is crucial in ensuring that users are aware of any changes to dispute resolution mechanisms.

Background of the Dispute

In this case, five US investors from California, Nevada, and Texas have filed a class-action lawsuit against Binance and its CEO Changpeng Zhao. They allege that the exchange sold unregistered securities on their platform and operated as unregistered broker-dealers.

The lawsuit has had a complex history, with the Second Circuit initially dismissing it in 2022 before reinstating it in 2024. The case was subsequently sent back to Judge Carter for further consideration.

Implications for Crypto Platforms

The judge's decision highlights the importance of clear notice when updating terms of service. This is particularly relevant in the context of cryptocurrency exchanges, where users may not always be aware of changes to dispute resolution mechanisms.