New York State has some of the strongest laws protecting the press in the U.S. These regulations allow defendants like the Wall Street Journal (WSJ) the right to object to a lawsuit from the outset, and can lead to the lawsuit being dismissed before it becomes lengthy and costly.
While this move might seem counterintuitive at first glance, it could actually be a calculated strategy by Binance. Binance may be trying to show that it is willing to be scrutinized and has nothing to hide. This step seems intended to send a clear message to asset holders on the exchange that Binance will resolutely defend itself, even if it means accepting the possibility of information leaks if the litigation proceeds publicly and protractedly.
Binance sues the Wall Street Journal.
In February 2024, the WSJ published an investigation alleging that Binance had fired employees after they raised concerns about over $1 billion in crypto transactions linked to sanctions against individuals from Iran.
Two weeks later, Binance filed a defamation lawsuit against Dow Jones & Company, the publisher of the WSJ, in the Southern District of New York. Binance alleged that the WSJ published at least 11 false statements in its February 2024 article.
This lawsuit came as a surprise to many. Typically, defamation lawsuits are difficult to prove . When the case involves a prominent figure like Binance and a reputable newspaper like the WSJ, the standards for proving intentional defamation become even more stringent.
“To convict someone of defamation, it’s not just about the details of the story being inaccurate,” lawyer Khurram Dara, a former policy advisor at Bain Capital Crypto and Coinbase, Chia in a BeInCrypto podcast. “[The WSJ] must have known at the time of writing that the information was false, or they must have shown utter disregard for the facts or the accuracy of the content.”
Not to mention, New York is also one of the most difficult places to deal with this type of lawsuit.
Why New York is such a surprising choice.
New York is one of the states with the strongest anti-SLAPP laws in the United States.
SLAPP stands for Strategic Lawsuit Against Public Participation – referring to lawsuits initiated by a powerful party not to win the case, but to use the lawsuit itself as pressure to silence or discourage the other party.
Their goal is to wear down their opponent financially and mentally so that they eventually give up.
The anti-SLAPP law was created to protect parties from this tactic. The law allows defendants like the WSJ to request the court to review whether the lawsuit is serious or merely an unfounded complaint. If the WSJ wins in this situation, Binance will have to pay all legal fees for the defendant.
“I find it interesting that [Binance] chose New York. I would choose somewhere where the laws against SLAPP are not that strict,” Chia Amanda Wick, Americas Regional Director at VerifyVASP, who previously worked as a lawyer for over 10 years at the U.S. Department of Justice.
She also noted that this wasn't the first time Binance had employed a SLAPP-like strategy in dealing with the press.
“[Binance] has targeted newspapers in an attempt to suppress negative information about itself,” Wick said, “I’ve also never seen any other crypto exchange sue the press, even when they’ve had cases under legal investigation.”
In November 2020, Binance sued Forbes for similar reasons in New Jersey, but withdrew the lawsuit just three months later before it even went to court. Notably, at that time, New Jersey did not have laws protecting the press, giving it a much more favorable legal position than New York in a situation like Binance's.
But things aren't so easy in New York, so if the lawsuit progresses, it could be bad news for Binance.
Clarifying information that may be detrimental to Binance.
If the unexpected scenario unfolds where the judge allows the WSJ lawsuit to proceed, the case will enter the "discovery" phase – meaning both sides must publicly disclose relevant documents, emails, and reports.
For Binance, this means the exchange may have to hand over internal control reports, emails exchanged between investigative and regulatory departments, transaction records… and all communications proving when and to what extent the exchange knew about the flow of funds linked to Iran.
The risks are further increased because Binance is not currently operating as a conventional company. Under a 2023 legal agreement , the exchange must operate under the supervision of two independent supervisory bodies designated by government agencies to ensure Binance truly complies with legal standards.
"If there is evidence that investigators warned their superiors and were ignored, or worse, fired while under supervision, that would be an extremely serious issue," Wick commented.
Dara, a former New York State Attorney General candidate, also noted that winning the trial may not have been Binance's primary goal in filing the lawsuit.
The real motive behind the lawsuit
Binance currentlyholds assets for over 300 million users . According to Dara, damage to its reputation by the press could be a life-or-death business risk for an exchange like Binance.
Unlike traditional finance, the crypto market operates continuously 24/7 on a global ecosystem, where information spreads extremely quickly and even a single piece of bad news can cause users to massively withdraw assets from the platform almost immediately.
He compared this situation to the collapse of Silicon Valley Bank, where a single announcement about a Capital shortfall went viral on social media, causing customers to withdraw $42 billion in a single day.
From that perspective, this lawsuit is not just a legal move, but also a public signal sent outwards .
As Dara once said: “Just one piece of bad news in this industry can have a huge impact… If customers leave the platform en masse, that would certainly be extremely detrimental to them.”
By filing a lawsuit in the most strictly regulated region, Binance seems to be emphasizing that they are willing to be scrutinized and are not afraid to be transparent about everything.
This move also sends a clear message to those holding assets on the platform that Binance will strongly protect its interests, even if it means the entire legal process will be subjected to closer scrutiny.
