Binance, the world’s largest cryptocurrency exchange, has won a class action suit levied against the firm for allegedly violating U.S. securities laws. The lawsuit was filed by digital token investors who bought nine different crypto assets via Binance’s online exchange in 2017. The defendants claimed that soon after buying the tokens – LEND, ICX, TRX, ELF, EOS, KNC, FUN, OMG, and QSP – many of them lost most of their value.
Court claims the plaintiff filed the case too late
The investors claimed that BINANCE “wrongfully engaged in millions of transactions” and did not warn them about the high risks of buying such tokens.
However, Andrew Carter, U.S. District Judge, stated that the lawsuit has been waived because the investors waited more than one year after business before filing their case.
Additionally, he noted that the domestic security laws are only applicable to US exchanges, and Binance is not a domestic exchange.
The investors claimed that the statute of limitations started running one year before filing their lawsuit in April 2020. According to the investors, this coincided with the period the U.S. Securities and Exchange Commission (SEC) released a “framework” that characterized their tokens as securities. Binance is headquartered in the Cayman Islands and operates an opaque corporate structure.
The investors added that Binance took advantage of the enthusiasm brought by cryptocurrencies and the marketing of their ICOs on behalf of the projects. They claimed that Binance profited from the associated trading fees while investors bought the tokens with the expectation of reasonable profit from owning them.
Coinbase faces a similar lawsuit
Although Binance also operates in the U.S. and uses Amazon Web Services to host its infrastructure, those are not enough reasons to consider the company as a domestic exchange.
This is not the only class-one lawsuit filed against a cryptocurrency exchange based on the purchase of tokens and their eventual loss of value.
Earlier last month, Coinbase was at the receiving end of a similar lawsuit in the same court, alleging that the firm is operating a securities exchange that is not duly registered.
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