A U.S. federal judge ruled that Binance cannot force a group of U.S. customers to arbitrate claims over losses tied to crypto tokens they bought on its global platform before Feb. 20, 2019, keeping a major class action in open court.
District Judge Andrew Carter Jr. of the Southern District of New York held that those claims were not bound by Binance.com’s 2019 arbitration clause because users lacked sufficient notice when the exchange unilaterally shifted its terms of use from the 2017 version, which had no arbitration or class‑action waiver provisions. Binance relied on a general change‑of‑terms clause and the posting of updated 2019 terms on its website, but the court found no evidence the company provided individual notice or formally announced the new arbitration provision to users.
Carter rejected Binance’s argument that its statements about operating in a decentralized manner altered basic contract law, saying such rhetoric did not change how internet‑based agreements are analyzed. He also concluded the 2019 arbitration clause could not be applied retroactively to claims that arose before its Feb. 20, 2019 effective date because the contract did not clearly state it would cover earlier conduct. A purported U.S. class‑action waiver appearing in a section heading of the 2019 terms was deemed unenforceable in federal court, as the contract did not actually set out the waiver and must be interpreted narrowly against Binance as drafter.
The suit, Williams v. Binance, is a proposed class action brought by five U.S. investors from California, Nevada and Texas who allege Binance and founder Changpeng Zhao illegally sold unregistered securities on Binance.com and failed to register as a broker‑dealer. The case was dismissed in 2022 and revived by the Second Circuit in 2024, sending it back to Judge Carter.
Binance said plaintiffs voluntarily dismissed all claims that accrued on or after Feb. 20, 2019, in response to Binance’s motion, and that the company will vigorously defend the remaining claims. The decision means the surviving claims will proceed in U.S. federal court rather than private arbitration in Singapore, leaving judges — not arbitrators — to decide whether crypto platforms can rely on unilaterally updated online terms to limit investor lawsuits.