Binance and Changpeng Zhao Face Legal Hurdles Following Supreme Court Decision

Binance and its founder Changpeng Zhao are now the focus of a class action lawsuit after the U.S. Supreme Court declined to hear their appeal on January 13.

The lawsuit accuses Binance of selling unregistered tokens that lost significant value, a move deemed actionable in the U.S. despite Binance’s claim of operating outside American jurisdiction.

The lawsuit alleges Binance failed to warn investors about the risks of several tokens, which were purchased in transactions finalized within the U.S. Binance, however, argued that U.S. securities laws shouldn’t apply to its platform as it’s not based in the country.

Binance and Zhao are also embroiled in a separate $1.8 billion lawsuit filed by FTX’s bankruptcy estate. The case involves a 2021 transaction where Binance sold a 20% stake in FTX back to the company for $1.7 billion in cryptocurrency, which FTX claims was fraudulent. Binance dismissed the allegations, calling them meritless.

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Zhao faced further challenges earlier in 2024, pleading guilty to charges of failing to implement an anti-money laundering (AML) program. He admitted Binance facilitated illegal transactions and was sentenced to four months in prison. Zhao acknowledged his errors in court, saying, “I failed to implement adequate measures and understand the seriousness of that mistake.”

These legal challenges reflect growing scrutiny of Binance’s operations as global regulators push for more accountability in the cryptocurrency sector. With multiple cases pending, the future of Binance and its leadership remains uncertain amid mounting pressure to align with regulatory expectations.

Kosta Gushterov