The U.S. Supreme Court has rejected a petition from Binance and its founder, Changpeng Zhao.
The two sides aimed to reconsider a decision enforcing U.S. stock market regulations on the platform, even though it doesn’t have a traditional brick-and-mortar office location.
The Supreme Court’s Ruling
The court decision on the 13th of January was made after an investor’s lawsuit, alleging that the biggest cryptocurrency trading platform had been selling unregistered tokens in an illegal manner, resulting in a significant decrease in their worth.
The main issue at hand is determining if Binance, a company without a formal headquarters, falls under the jurisdiction of U.S. securities laws, since it provided services to American customers.
In March 2024, it was ruled by the U.S. Court of Appeals for the Second Circuit that American securities laws could still be applicable to a foreign exchange, even though the entity itself is not based in the U.S. This decision was reached because transactions made by American investors resulted in actions happening within the borders of the United States, making them subject to our country’s regulations.
Additionally, the appeals court pointed out that U.S. residents executed trades through Binance while they were within the nation’s borders. It was argued that as the trades were being handled by U.S. servers, Binance should abide by U.S. regulations.
Last December, Binance asked the Supreme Court to reconsider this decision, stating that recent technological developments make it simpler for investors to trade on international platforms. They explained that these advancements in connectivity enable American traders to participate in foreign trading platforms.
Legal Troubles
In simpler terms, since the Supreme Court declined to take up the case, the class-action lawsuit claiming the sale of unregistered tokens as being illegal can now move forward.
2020 saw a legal action initiated by a band of investors who bought diverse tokens on Binance since 2017. They alleged that Binance didn’t adequately inform them about substantial risks tied to these tokens, and they sought reimbursement for their incurred losses.
In the year 2023, it was revealed that the U.S. Securities and Exchange Commission (SEC) had accused Binance of breaking laws by providing services to American investors in an unlawful manner. The SEC claimed that Binance permitted American citizens to trade cryptocurrencies which should have been registered as securities.
That particular year, the exchange consented to a $4.3 billion fine in November as part of an agreement with the U.S. Department of Justice (DOJ), following breaches of anti-money laundering (AML) and counter-terrorism financing regulations.
In April 2023, the company encountered a separate class action lawsuit in Canada, not long after declaring its withdrawal from the nation. Additionally, in 2024, the federal government imposed a fine of $4.4 million on the company due to violations of Anti-Money Laundering regulations.
Furthermore, FTX’s bankruptcy team is pursuing a lawsuit worth $1.8 billion against Binance and its founder, Zhao, due to accusations of a deceptive share transaction in 2021. The former CEO was previously jailed for four months starting in April 2024 following his conviction for neglecting to establish adequate anti-money laundering measures on the exchange.
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2025-01-14 23:22