Binance Faces Renewed Legal Trouble as U.S. Court Revives Class Action Lawsuit

Binance reputation woes continue as a U.S. Court breathes new life into a class action lawsuit against it. The world’s biggest exchange was sued by customers claiming the company failed to comply with the Securities Act of 1933 and multiple “Blue Sky” securities laws in 49 states.

The revival of the class action lawsuit comes at a time when the exchange is trying to repair its reputation and cater to new audiences. The company’s efforts include the launch of a controversial “Crypto-scented” perfume. At the same time, former Binance executives seek to move on by launching a new cryptocurrency exchange: bloom.

User Lawsuit Gets Second Life

The class action lawsuit against Binance started as an operative complaint back in December of 2020 as they sought “rescission or damages, interest, and attorney’s fees”. Binance sought to have the case dismissed or moved to arbitration, which was granted in March 2022.

The district court, which granted the motion to dismiss, justified its decision by stating the claims were “impermissibly extraterritorial”. The claim that “Blue Sky” laws were broken was dismissed due to the plaintiffs not residing in any of the states that had them. The court also found the claim to be brought by the plaintiffs too late.

Now, the 2nd U.S. Circuit Court of Appeals has reversed the original motion to dismiss as it found it “premature” and “erroneous”. According to this new court, domestic securities laws did indeed apply to the transactions as these would have become “irrevocable within the United States” just as stated by the plaintiffs.

The court determined the claims were filed within the legal time limit as many of the plaintiffs had acquired EOS and TRX within the year before filing the claim. On the topic of “Blue Sky” laws, the court determined that the “dismissal at this stage on this basis was improper”, as this should only be considered once the case moves beyond the motion to dismiss stage.

Now that the court has unanimously agreed to “REVERSE and REMAND as to the claims challenged on appeal”, the class action lawsuit against Binance will return to U.S. District Judge Andrew Carter in Manhattan.

The Smell of Crypto

Binance has released a new fragrance. Going by the name of “CRYPTO”, the perfume is targeted at women and seeks to celebrate International Women’s Day. The perfume contains notes of “ozone, salt, and moss” along with “Oud, Mandarin, and precious woods”.

Binance’s attempt to “open up conversations” around the “gender gap” was received with mixed reactions. Phantom Wallet’s official X account, for example, replied with a simple “Did you hire more women?”. Other users went further by creating fake ads for the company’s next “womens’ empowerment product line”.

Rachel Conlan, Binance’s CMO, replied to the criticism by telling TechCrunch that the goal of the campaign was to be “irreverent, to be fun, to try to push boundaries”. She also stated that the campaign was developed by an “all-female team” and that no matter the campaign, someone would always be upset.

Former Executives Start New Trading Platform

Rising competition is another in which Binance has been having trouble recently. Following its departure from Nigeria as a result of mounting regulatory pressure, the exchange has also seen increasing competition.

The latest platform to become part of the growing list of competitors is Blum, an exchange founded by two former high-level Binance executives. Founded by Gleb Kostarev and Vladimir Smerkis, Blum will offer its users wallet-to-wallet trading across blockchains and automated token listings through software vetting.

The platform will support over 30 blockchain networks, applications like Telegram, and localized P2P trading. While not operating yet, the team behind the platform will be focusing mainly on the Asian market and is currently considering where to establish its headquarters.