A U.S. federal judge has ruled that Binance cannot compel a group of U.S. customers to resolve losses tied to crypto tokens they bought on Binance’s global site before Feb. 20, 2019, through arbitration, keeping a major proposed class action in federal court.
District Judge Andrew Carter Jr. of the Southern District of New York found the exchange’s 2019 arbitration clause did not bind customers whose claims arose before that date. The court concluded users had insufficient notice of the exchange’s unilateral overhaul of its terms of use: Binance had moved from a 2017 set of terms that contained no arbitration or class‑action waiver provisions to a new 2019 version posted online, but presented no evidence it gave individualized notice or formally announced the new arbitration requirement.
Binance had relied on a general change‑of‑terms provision and the public posting of the updated terms. Carter rejected that defense and also dismissed Binance’s suggestion that promotional statements about operating in a decentralized way should alter the ordinary rules of contract formation for internet agreements. He further held the 2019 arbitration clause could not be applied retroactively to conduct that occurred before its Feb. 20, 2019 effective date because the contract did not clearly express an intent to reach earlier claims.
The judge also found a supposed U.S. class‑action waiver—referenced only in a section heading of the 2019 terms—unenforceable in federal court. Because the waiver was not spelled out in the contract text, the court said it must be interpreted narrowly against Binance as the drafter.
The litigation, Williams v. Binance, is a proposed class action brought by five U.S. investors from California, Nevada and Texas. They allege Binance and founder Changpeng Zhao sold unregistered securities on Binance.com and failed to register as a broker‑dealer. The suit was dismissed in 2022, revived by the Second Circuit in 2024, and returned to Judge Carter for further proceedings.
Binance said the plaintiffs voluntarily dismissed all claims that accrued on or after Feb. 20, 2019 in response to its motion, and that the company will vigorously defend the remaining pre‑2019 claims. The court’s decision means those surviving claims will proceed in U.S. federal court rather than private arbitration in Singapore, leaving judges—rather than arbitrators—to decide whether crypto platforms may rely on unilaterally updated online terms to limit investor lawsuits.