Federal Court Keeps Pre-2019 Investor Claims Against Binance in Open Court
A federal judge in New York has ruled that Binance cannot force a group of U.S. investors to move their crypto loss claims into private arbitration, allowing a major class action lawsuit to continue in open court.
In a decision issued by Judge Andrew Carter Jr. of the U.S. District Court for the Southern District of New York, the court found that Binance’s 2019 arbitration clause does not apply to customer claims that arose before Feb. 20, 2019.
The case, Williams v. Binance, centers on whether the crypto exchange could retroactively apply updated terms of service — including an arbitration clause and class action waiver — to users who signed up under earlier rules.
Judge Carter determined that Binance’s 2017 terms of use did not include any arbitration requirement or class action waiver. When the company updated its terms in 2019, it relied on a general change-of-terms provision and simply posted the new agreement online. The court found there was no clear evidence that Binance directly notified users or formally announced the addition of the arbitration clause.
Because of that lack of notice, the judge ruled that the 2019 arbitration clause could not be enforced against claims that arose before its effective date.
The court also rejected Binance’s attempt to enforce a U.S. class action waiver embedded in a section heading of the 2019 terms. According to the ruling, the contract did not clearly outline the terms of such a waiver, and under contract law, ambiguous provisions must be interpreted narrowly against the party that drafted them — in this case, Binance.
Background of Williams v. Binance and What Happens Next
The lawsuit was filed by five U.S. investors from California, Nevada, and Texas. They allege that Binance and its founder, Changpeng Zhao (CZ), sold unregistered securities through Binance.com and failed to register as a broker-dealer in the United States.
The case was initially dismissed in 2022. However, in 2024, the U.S. Court of Appeals for the Second Circuit revived the investors’ claims and sent the case back to Judge Carter’s court for further proceedings.
In response to the latest ruling, a Binance spokesperson stated that the plaintiffs voluntarily dismissed all claims that accrued on or after Feb. 20, 2019. According to the company, only a limited set of earlier claims remain, and Binance says it plans to “vigorously defend” itself against what it calls a meritless case.
With arbitration off the table for pre-2019 claims, the remaining issues will now move forward in federal court rather than being handled privately in Singapore. The outcome could have broader implications for crypto exchanges and other online platforms that rely on updated terms of service to limit legal exposure.
