Binance Argues Users Agreed to Settle Disputes Privately
Binance is urging a U.S. federal court to move a class-action lawsuit into private arbitration rather than allowing it to continue through the public legal system. The lawsuit accuses the crypto exchange of violating U.S. securities laws by offering and selling digital tokens that should have been registered as regulated financial products.
Image 1: Binance (Source: PYMNTS)
The exchange argues, however, that the plaintiffs had already agreed to settle any disputes through arbitration — not in court — when they accepted the platform’s terms of use.
In a legal submission dated 16 May, Binance argued that all users agreed to its updated terms and conditions, which came into effect on 20 February 2019. These terms, the company says, include clauses that require disputes to be handled privately and prevent users from taking collective legal action against it. Binance insists these agreements should apply to all participants in the case.
Legal Limits on Group Action
The case revolves around whether Binance’s terms — particularly the arbitration and class-action waiver provisions — should be legally enforced. Binance claims that anyone who used its platform after the 2019 update effectively agreed to settle disagreements outside of court, even if they didn’t read or acknowledge the new rules directly.
The company also noted that its earlier user agreement included a statement saying it could change its terms at any time without notifying individual users. It argues that this gave it the legal authority to introduce the new arbitration and no-class-action clauses.
It’s latest filing aims to clarify that, even if the court decides older claims (before February 2019) should stay in court, it must still compel arbitration for anything that happened after that point. It also contends that the ban on group lawsuits should apply to all claims, regardless of when the issues occurred.
Court History and Pushback
This isn’t the first time it has tried to get the case dismissed or moved into arbitration. Back in March this year, U.S. District Judge Andrew Carter rejected Binance’s earlier request to send the entire matter to arbitration. He ruled that customers who bought tokens between April 2017 and February 2019 weren’t subject to the newer terms and could keep pursuing legal action in court. He left the decision open for post-2019 claims, allowing further arguments from Binance.
The lawsuit itself dates back several years. In 2022, Judge Carter originally threw out the case, agreeing with Binance’s argument that it wasn’t bound by U.S. laws because it has no physical base of operations within the United States. However, that ruling didn’t stand for long. In March 2024, a federal appeals court overturned it, and shortly after, the U.S. Supreme Court declined to hear Binance’s appeal. That move effectively allowed the class-action case to continue.
Since then, Binance has tried to narrow the scope of the lawsuit and keep it out of the public eye by pushing for private arbitration.
Image 2 Binance App (Source: L’Usine Digitale)
Ripple Effects for Crypto Regulation
Although the legal challenge doesn’t directly target Binance.US — a separate offshoot set up for American users — the outcome could have widespread consequences. The central question is whether certain cryptocurrencies are considered securities under U.S. law, which would subject them to far stricter regulatory rules.
If the court sides with Binance and enforces the arbitration clause, much of the dispute would move behind closed doors. This would limit public access to legal arguments, evidence, and the decision-making process. Arbitration also tends to favour corporations, as proceedings are generally less formal and more limited than court trials.
But if the court refuses Binance’s request, the matter will remain in the judicial system. That could lead to a full public trial, including document disclosures, witness testimony, and potentially damaging revelations about how Binance listed and marketed digital tokens. Such a case could set important legal precedents and offer regulators new insights into how exchanges have operated in a largely unregulated space.
The legal stakes for Binance remain high. In late 2023, the company reached a $4.3 billion settlement with U.S. authorities after facing separate allegations from the Securities and Exchange Commission (SEC) for selling unregistered financial products and failing to register its platform.
On top of that, It was hit with a new class-action lawsuit in Canada in April 2024. That suit accuses the company of breaching Canadian securities laws following its exit from the country a year earlier.
The latest push to enforce arbitration is another sign that Binance is keen to avoid prolonged public scrutiny of its past activities. Whether the court agrees remains to be seen.
