A United States federal judge has ruled that Binance cannot compel a group of American users to arbitrate claims for damages over crypto tokens purchased on its global platform before February 20, 2019, maintaining a larger class action in open court.
District Judge Andrew Carter Jr. in the Southern District of New York ruled Thursday that the claims were not bound by Binance.com’s 2019 arbitration clause because customers lacked sufficient notice when the company unilaterally removed its terms of use from the 2017 version, with no arbitration or class action.
According to the judge, Binance relied on a general change of terms and the posting of the updated 2019 terms on its website, and there was no evidence that the exchange provided any individual notice or formally “announced” the new arbitration provision to users.
Carter found that Binance’s “new world” statements about decentralized governance did not change basic contract law analysis for Internet-based contracts.
It concluded that the 2019 arbitration clause could not be applied to claims that arose before its February 20 effective date, because the agreement never expressly stated that it would cover prior conduct.
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Carter also said that a US class action waiver embedded in the title of a section of the 2019 terms is unenforceable in federal court because the agreement never actually set forth the terms of any such waiver and was to be narrowly construed as drafted against Binance.
Binance says claims after 2019 have already been rejected.
The case, Williams v. Binance, is a proposed class action brought by five US investors from California, Nevada and Texas who claim that Binance and founder Changpeng Zhao (CZ) illegally sold unregistered securities on Binance.com and failed to register as a broker-dealer.
The case was first dismissed in 2022 before the Second Circuit reinstated the investors’ claims in 2024, sending the dispute back to the Carter court.
In a statement to Cointelegraph, a Binance spokesperson said that “in response to our motion on this matter, the plaintiff voluntarily and properly dismissed all claims that accrued on or after February 20, 2019.” He added that Binance will “vigorously defend the limited claims that remain in this meritless case.”
The remaining claims will now proceed in federal U.S. court rather than private arbitration in Singapore, as judges, rather than arbitrators, assess whether crypto platforms can rely on unilaterally updated online terms to limit investor lawsuits.
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