New York Judge Denies Binance’s Motion to Compel Arbitration, U.S. Investor Lawsuit to Proceed to Public Court Hearing

On February 27, Judge Andrew Carter Jr. of the U.S. District Court for the Southern District of New York ruled that Binance lacks authority to compel U.S. users into arbitration over losses from crypto purchases on its global platform before February 20, 2019—and that the related class action will proceed publicly in federal court. The judge found Binance unilaterally updated its Terms of Use in 2019 to add an arbitration clause without providing adequate individual notice to users. Since the 2017 version of the terms included no arbitration or class action waiver provisions, the 2019 amendments cannot apply retroactively to claims arising before that date. Additionally, the court determined the so-called “U.S. class action waiver” in the 2019 terms did not explicitly outline specific terms and is unenforceable in federal court. The case—Williams v. Binance—was filed by five U.S. investors from California, Nevada, and Texas, alleging Binance and founder Changpeng Zhao (CZ) illegally sold unregistered securities on Binance.com and failed to register as broker-dealers. The case was dismissed in 2022 but reinstated by the U.S. Court of Appeals for the Second Circuit in 2024. Binance noted that plaintiffs have voluntarily withdrawn claims arising after February 20, 2019, and the company will continue defending against the remaining allegations.