A federal judge in Manhattan has rejected Binance's request to take its class-action lawsuit to arbitration. The lawsuit alleges the exchange sold "unregistered" Token to U.S. investors, according to a ruling announced Thursday by the U.S. Court of the Southern District of New York.
Judge Andrew L. Carter Jr. ruled that Binance failed to properly notify users when it amended its Terms of Service in February 2019 to include arbitration clauses and class action waiver clauses. The plaintiffs (residents of California, Nevada, and Texas) all created Binance accounts between September 2017 and April 2018, a time when these terms did not yet exist.
The case stems from a wave of class-action lawsuits in April 2020 targeting numerous crypto exchanges and Token Issuance. The case was initially dismissed in 2022, but was reinstated by the Second Circuit Court of Appeals in 2024, arguing that US securities laws could still apply to Binance despite the exchange not having a physical headquarters in the US. In January 2025, the US Supreme Court declined to review that ruling.
Binance argued that the 2019 terms should apply, but the court said that simply posting the new terms on the website without sending specific notices to each user was insufficient. Although the 2017 terms included a provision allowing for changes to the terms, the court cited precedent that users are not obligated to constantly check XEM the other party has unilaterally modified the contract.
Even assuming the plaintiff “knew” about the arbitration clause through litigation, the court still found that the clause could not be applied backward to disputes that had arisen previously. Under California law, if a unilateral change does not explicitly state whether it applies to claims that have already arisen, it is limited by the principle of “good faith and fairness” in contract performance.
The section on "waiver of class action" also failed to convince the court. Although the title mentions "CLASS ACTION WAIVER," the content below doesn't specify the details of this waiver, making the language XEM ambiguous. With a one-sided template contract, the court would interpret it unfavorably in favor of the drafter – Binance.
Previously, the plaintiffs voluntarily withdrew their claims related to conduct after the February 2019 statute of limitations, so the lawsuit now only revolves around conduct prior to 2019. The article also mentions that Changpeng Zhao (founder of Binance) pleaded guilty to federal charges in 2023 and was pardoned by President Trump in October 2025.
A Binance representative stated that the plaintiff had “voluntarily and rightfully” withdrawn claims arising from February 20, 2019 onwards, and Binance would “aggressively defend” against the remaining allegations, which they consider unfounded.
The article "Judge blocks Binance from pushing Token Sale lawsuit to arbitration" first appeared on CoinMoi .
