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Investors Get Green Light to Pursue Class Action Against Binance

A consortium of investors aiming to bring legal action against Binance, its former CEO Changpeng Zhao, and other top executives has received a fresh opportunity to pursue their claims. The Second Circuit Court of Appeals recently reversed a previous ruling by a lower court that had dismissed the lawsuit, thereby allowing the potential class action to move forward against the largest cryptocurrency exchange in the world.

Initially lodged in April 2020, the lawsuit was initiated by a group of cryptocurrency investors who asserted that they had acquired securities, including ERC-20 tokens such as EOS, TRX, ELF, FUN, ICX, OMG, and QSP, from Binance.

Of particular note, the EOS token, which is issued by Block.One, has ties to Bullish, the parent company of CoinDesk, which in turn is the parent company of Binance.

New Ruling Reverses Dismissal Decision

In May 2022, Judge Andrew Carter of the Southern District of New York dismissed the case, citing that the plaintiffs had filed their lawsuit beyond the statute of limitations. Additionally, Judge Carter determined that Binance, being a non-domestic exchange, lacked sufficient ties to the United States to fall under federal securities laws.

However, the recent decision by the Second Circuit Court of Appeals overturned Judge Carter’s ruling and remanded the case to the district court. The appeals court concluded that the plaintiffs had feasibly alleged that the transactions involving the assets occurred on servers within the United States, and that they had accessed Binance from within the U.S. Furthermore, the ruling challenged Binance’s assertions of lacking a headquarters or physical presence.

Regarding the issue of timeliness, the circuit court clarified that the statute of limitations period commenced at the time of the plaintiffs’ token purchases, which fell within a year of initiating the lawsuit.

It’s important to highlight that the recent ruling specifically addresses seven of the tokens mentioned in the original complaint.

However, the ruling does not make a determination regarding whether the tokens in question qualify as securities or not.

Should the case not undergo further appeal and be returned to the district court, both parties will have the opportunity to present arguments regarding whether the tokens satisfy the definition of securities.

Binance retains the option to appeal to the U.S. Supreme Court.

Should it opt not to do so, or if the Supreme Court declines to review the appeal, jurisdiction over the case will revert back to the district court.

Binance Exits Nigerian Market After Regulatory Scrutiny

Binance faces another challenge as it recently halted all services involving the Nigerian naira (NGN) due to regulatory scrutiny. The world’s largest cryptocurrency exchange announced last week that it would suspend NGN withdrawals after March 8.

This decision follows the Nigerian government’s imposition of a significant $10 billion fine on Binance as part of a broader crackdown on the platform. The government aims to stabilize the nation’s local currency.

The Nigerian authorities’ actions against Binance and other crypto firms are driven by concerns over ongoing manipulation of the forex market and the illicit movement of funds. They believe these activities have contributed to the depreciation of the naira.

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Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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