On Friday, March 28, 2025, Judge Andrew L. Carter Jr. of the United States District Court for the Southern District of New York denied in part a motion by Binance and its former CEO, Changpeng Zhao, to force a class-action lawsuit into arbitration. The lawsuit, filed by plaintiffs JD Anderson, Cory Hardin, David Muhammad, Ranjith Thiagarajan, and Chase Williams, accuses Binance of violating federal and state securities laws by offering and selling digital tokens without proper registration. The court’s ruling allows some claims to proceed in federal court while leaving others unresolved, pending further input from the parties involved.
The case, titled Anderson v. Binance, centers on allegations that Binance, a major cryptocurrency exchange, and Zhao, who led the company from 2017 until November 2023, facilitated illegal securities transactions through the Binance.com platform. The plaintiffs, residents of California, Nevada, and Texas, claim they purchased tokens on the exchange and suffered financial losses as a result of these unregistered offerings. They are seeking damages and other relief on behalf of themselves and others in similar situations.
Binance and Zhao sought to compel arbitration based on updated terms of use introduced in 2019, which included a clause requiring disputes to be resolved through binding arbitration in Singapore. The plaintiffs had all created their Binance accounts between September 2017 and April 2018, agreeing to the 2017 terms of use, which lacked an arbitration provision. Those earlier terms, however, included a clause allowing Binance to amend its rules and agreements at any time, with changes taking effect once posted on the website. Continued use of the platform after such updates would signal acceptance of the new terms, according to the company.
On February 20, 2019, Binance posted revised terms that introduced the arbitration requirement, along with a choice-of-law provision favoring Singapore law. The company argued that the plaintiffs, by continuing to use the platform after this date, were bound by the new terms. Court records show that some plaintiffs traded on Binance as late as 2022, while one held assets in an account as of July 2024. Binance asserted that this ongoing activity demonstrated their agreement to the 2019 terms.
The plaintiffs countered that they were not properly notified of the 2019 changes and thus never agreed to arbitration. They argued that the lack of individual notice about the updated terms meant they could not be forced into arbitration, especially for claims tied to federal securities laws. Their legal team, led by attorneys from Selendy Gay Elsberg PLLC, emphasized that the original 2017 terms did not mention arbitration, and the subsequent update should not retroactively apply to their earlier transactions.
In his ruling, Judge Carter determined that the plaintiffs did not receive sufficient constructive notice of the 2019 terms when they were posted, as Binance did not directly inform users of the changes. However, he found that the plaintiffs had actual notice of the arbitration clause by April 3, 2020, when the initial complaint in this case was filed, referencing the updated terms. Despite this, the court denied Binance’s motion to compel arbitration for claims arising before February 20, 2019, the date the new terms were introduced. For claims after that date but before the plaintiffs learned of the arbitration clause through the lawsuit, the judge withheld a final decision, citing unresolved questions about the clause’s retroactive application.
The court also addressed a class-action waiver mentioned in the 2019 terms, which warned U.S. residents of limits on their rights to pursue collective legal action. However, the terms provided no specific details on how the waiver would work. Judge Carter noted this ambiguity and requested further clarification from both sides on its enforceability.
Additionally, Binance’s request to seal certain exhibits was granted. These documents, submitted with the motion to compel arbitration, contained sensitive user data, including financial transaction details, email addresses, and IP addresses. The court agreed that protecting this information justified keeping it under seal.
Judge Carter ordered the parties to submit a joint status report within 14 days, addressing two key issues: whether the 2019 terms apply to claims arising between the terms’ introduction and the plaintiffs’ awareness of them during the litigation, and the validity of the class-action waiver. The report must indicate if the parties’ positions have shifted or if they intend to provide additional briefing. The ruling partially upholds the plaintiffs’ right to pursue their case in court while leaving open the possibility of arbitration for later claims, depending on future arguments.
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