Binance wins the rejection of the class action over the 2018 tokens that have been refueled

The federal judge dismissed a class action alleging that Binance violated United States securities laws by not registering as a broker-dealer or stock exchange and selling cryptocurrencies that were not registered by the U.S. Securities and Exchange Commission (SEC).

The original complaint filed in the U.S. District Court for the Southern District of New York was filed by a group of investors who claimed to have invested in EOS, BNT, SNT, QSP, KNC, TRX, FUN, ICX, OMG, LEND, ELF and CVC tokens around 2017. and 2018. An amended complaint was filed, containing only nine tokens, with BNT, SMT and CVC removed.

Investors have stated that the tokens have lost much of their value since the purchase and are seeking compensation for the price paid for the tokens and fees paid to Binance in connection with their purchases.

“Binance and Issuers have improperly engaged in millions of transactions, including soliciting, offering and selling securities, without registering tokens as securities and without Binance registering with the SEC as a stock exchange or broker-dealer. As a result, investors have not been made aware of the significant risks associated with these investments, as required by federal and state securities laws.

Investors further claimed that Binance had benefited from the enthusiasm generated by cryptocurrencies, marketing tokens and initial coin offerings (ICOs) on behalf of projects and benefited from the associated trading fees, adding that investors “purchased tokens with a reasonable expectation of profit from their ownership.”

Judge Andrew Carter said in a ruling on Thursday that as investors waited more than a year after token purchase, they filed the lawsuit too late. Most tokens were purchased in 2018 and the original submission was not by April 2020.

Investors argued that since the SEC released a framework in April 2020 stating that digital tokens were securities, the time limit for filing a complaint should begin to run. Carter found that the applicable laws apply when an alleged violation occurs, not when it is found.

Judge Carter also said that Binance is not subject to domestic securities laws as it is not a US domestic stock exchange and is headquartered in the Cayman Islands. Binance uses Amazon Web Services to host its US-based infrastructure, but that’s not enough to treat Binance as a domestic exchange.

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“The plaintiffs have to claim more than the claim that the plaintiffs bought the tokens while they were in the United States and that the title passed in whole or in part through servers located in California that host the Binance website,” Carter wrote in the motion.

This is not the only class action lawsuit filed against cryptoburg for such reasons. On March 11, a lawsuit was filed against the same court, alleging that it operated as an unregistered stock exchange. Similar arguments are made against Coinbas, with the applicants claiming that they were not warned of the risks of investing in cryptocurrencies.

Binance did not respond immediately to Cointelegraph’s request for comment.

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