NEW YORK, Feb 26 (Reuters) – A federal judge on Thursday rejected Binance’s request that customers who accused the world’s largest cryptocurrency exchange of illegally selling unregistered tokens that lost much of their value arbitrate their claims.
U.S. District Judge Andrew Carter in Manhattan said customers could pursue claims that arose by February 20, 2019 in court, because Binance did not sufficiently notify them that it modified their terms of use to require arbitration and waive the right to sue in a class action.
Carter said there was no evidence that Binance “announced” an arbitration provision, or told customers in the terms of use where they might look for one. He also said the alleged class-action waiver in Binance’s 2019 terms of use was ambiguous and unenforceable.
The customers agreed in November to dismiss claims arising after February 20, 2019.
“Binance will vigorously defend the limited claims that remain in this meritless case,” a Binance spokesperson said in response to Carter’s decision.
Changpeng Zhao, the Binance founder and former chief executive, is also a defendant. His lawyers did not immediately respond to requests for comment.
Some defendants prefer arbitration to litigation because arbitration can remain confidential, make gathering evidence more difficult, and cost less.
Customers who suffered losses on seven tokens – ELF, EOS, FUN, ICX, OMG, QSP and TRX – accused Binance of failing to warn that purchases carried “significant risks,” as required under federal and state securities laws, and sought to recoup what they paid.
Carter dismissed the lawsuit in 2022, but a federal appeals court revived it two years later.
(Reporting by Jonathan Stempel in New York; Editing by Sonali Paul)
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