Key Highlights
- U.S. judge rules Binance can’t force arbitration, letting customers sue over unregistered token losses in court.
- Seven tokens, including ELF and EOS, are under scrutiny for undisclosed “significant risks,” reviving a 2022 dismissed case.
- Binance faces growing U.S. scrutiny as Senator Blumenthal questions links to sanctioned entities and money laundering.
A U.S. federal judge ruled on Thursday that Binance cannot force customers to arbitrate claims over crypto losses. The decision stems from allegations that the world’s largest cryptocurrency exchange sold unregistered tokens, causing investors to lose significant value.
According to a Reuters report, U.S. District Judge Andrew Carter in Manhattan found that Binance failed to notify users that its updated terms required arbitration and waived class-action rights. Consequently, customers can pursue claims in court for transactions up to February 20, 2019.
Judge Carter also highlighted that Binance never clearly told users about the arbitration rule or where to find it in their terms. He also said the class-action waiver was confusing and couldn’t be enforced.
“Binance will vigorously defend the limited claims that remain in this meritless case,” a spokesperson said. Changpeng Zhao, Binance’s Co-Founder, is also a defendant.
Alleged token risks and international echoes
The case involves the loss of seven tokens: ELF, EOS, FUN, ICX, OMG, QSP, and TRX. Customers alleged that Binance failed to disclose that these transactions involved “significant risks” under federal and state securities laws. The case was dismissed in 2022 but reinstated in 2024 by a federal appeals court.
In a similar case in Ontario, Canada, a court permitted a class-action lawsuit against Binance for providing crypto derivatives to retail investors without proper registration. The court held that these crypto products may be considered securities or derivatives, contrary to Binance’s claim that it simply facilitated trading.
Heightened scrutiny and regulatory pressure
The arbitration ruling comes as Binance faces increasing regulatory pressure. U.S. Senator Richard Blumenthal (D-CT) recently questioned the exchange’s CEO over reports linking Binance to sanctioned Iranian and Russian entities.
He pointed to internal investigations showing Binance partners helped launder money and carry out illegal trades. Blumenthal criticized the company for trying to “evade accountability” instead of stopping these activities. This scrutiny comes after the SEC dropped a 2025 lawsuit against Binance and following the presidential pardon of Zhao in October 2025.
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