A United States appeals court has breathed new life into a class-action lawsuit against Binance US, one of the world’s largest cryptocurrency exchanges. The lawsuit, which alleges manipulation of the HEX token’s price, had previously been dismissed but has now been partially revived.
The United States Ninth Circuit Court of Appeals has partially overturned the dismissal of a class-action lawsuit against Binance US. The lawsuit, centered on alleged price manipulation of the HEX cryptocurrency token, has been given new life following the court’s ruling on August 12.
The case, initially filed in 2021 by plaintiff Ryan Cox, accuses the crypto exchange and CoinMarketCap of unlawfully manipulating the HEX token’s price. Cox alleges that these entities artificially restricted HEX’s ranking on CoinMarketCap, a Binance-owned cryptocurrency price-tracking platform, trading at lower prices than Binance’s cryptocurrencies.
A panel of three judges disagreed with the district court’s earlier dismissal, which had ruled that Cox failed to establish a sufficient connection between specific actions in Arizona and Binance US. The appeals court found that the district court’s requirement for establishing “sufficient minimum contacts” was incorrect. It noted that both parties have significant connections with the broader United States due to their incorporation or principal place of business within the country.
The panel’s opinion stated that these connections satisfy the due process requirements for personal jurisdiction and determined that Cox’s claims of price manipulation against Binance.US were valid. As a result, the case has been remanded for further legal proceedings.
This ruling comes against increased scrutiny of the HEX token and its founder, Richard Heart. On July 31, 2023, the SEC filed a separate lawsuit against Heart for alleged violations of federal securities laws and defrauding investors of at least $12.1 million. The SEC claims that Heart misused investor funds for personal luxury purchases, including a 555-carat diamond, expensive watches, and high-end cars.
Reviving this lawsuit against them adds another layer of complexity to the ongoing legal challenges in the cryptocurrency industry, potentially setting precedents for how U.S. courts approach jurisdiction in cases involving digital asset exchanges and price manipulation allegations.
In a separate legal matter, Binance is celebrating a significant milestone in its ongoing dispute with the U.S. Securities and Exchange Commission (SEC). A federal court recently dismissed several of the SEC’s major claims against the exchange, including rulings that crypto tokens are not securities.
Also, sales of Binance Coin (BNB) on secondary exchanges were not sufficiently alleged to be securities, and Binance’s stablecoin, BUSD, is not classified as a security. Binance hailed this decision as a victory for the entire cryptocurrency industry, while Binance US stated it remains prepared for the next phases of this legal journey.
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