Judge blocks Binance from pushing class action suits over token sales into arbitration

A federal judge in Manhattan has denied Binance’s attempt to force arbitration in a class action alleging the exchange sold unregistered digital tokens to U.S. investors, according to a Thursday opinion from the U.S. District Court for the Southern District of New York.

Judge Andrew L. Carter Jr. found that Binance failed to properly notify users when it amended its Terms of Use in February 2019 to add an arbitration clause and class action waiver. The plaintiffs, residents of California, Nevada and Texas, all created their Binance accounts between September 2017 and April 2018, when no such provisions existed.

The case traces back to a wave of class action lawsuits filed in April 2020 against major crypto exchanges and token issuers. It was initially dismissed in 2022 but revived by the Second Circuit in 2024, which held that U.S. securities laws applied to Binance even without a physical domestic headquarters. The Supreme Court declined to review that ruling in January 2025.

Binance argued its 2019 terms should govern, but the court noted that simply posting updated terms on a website, without individualized notice, was insufficient. The original 2017 terms included a change-of-terms provision, but the court cited Ninth Circuit precedent holding that users have no obligation to periodically check whether the other side has unilaterally changed a contract.

Even assuming the plaintiffs gained actual notice of the arbitration clause through the litigation itself, the court held the provision could not reach backward. Under California law, a unilateral modification silent on whether it applies to accrued claims is “restricted based on the implied covenant of good faith and fair dealing.”

The class action waiver also failed. While a heading in Binance’s terms references a “CLASS ACTION WAIVER,” the body of the section never details the terms of such a waiver. The court called the language ambiguous and interpreted the adhesion contract against Binance as drafter.

The plaintiffs had previously voluntarily dismissed claims arising after the February 2019 effective date, narrowing the case to pre-2019 conduct. Binance founder Changpeng Zhao, who pleaded guilty to federal crimes in 2023, was pardoned by President Trump in October 2025.

The ruling comes as Binance’s U.S. regulatory picture has shifted. The SEC moved to dismiss its own enforcement action against the exchange last May. But this private class action remains active, and Thursday’s opinion clears a significant procedural hurdle for the plaintiffs.

Binance did not immediately respond to a request for comment.

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