Crypto theft victims escape Binance arbitration after US appeal court intervenes

Court takes unusual step of issuing a writ of mandamus to allow eight alleged cryptocurrency theft victims who never agreed to Binance’s terms to pursue their claims in court.

Eight alleged victims of cryptocurrency theft will be allowed to pursue proposed class actions against Binance after a US appeal court overturned an order forcing them into arbitration despite none of them ever having agreed to the exchange’s terms.

In a decision handed down in Miami on Wednesday (19 August), the US Court of Appeals for the Eleventh Circuit granted the claimants a writ of mandamus – an extraordinary remedy available only in exceptional circumstances – and directed a federal judge in Florida to vacate his March order compelling arbitration.

The background

The eight claimants are pursuing proposed class actions against Binance Holdings, BAM Trading Services (which operates Binance US) and Binance founder Changpeng Zhao, alleging that cryptocurrency stolen or fraudulently obtained from them was laundered through the exchange. Their claims include alleged violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) and consumer protection laws in California and Massachusetts.

They further allege that Binance operated an unlicensed money-transfer business and failed to comply with obligations under the Bank Secrecy Act and other laws requiring financial businesses to detect criminal activity. The allegations have not yet been tested in court.