A federal appeals court has ruled that crypto theft victims can sue Binance in US courts, rejecting the exchange's attempt to push their claims into arbitration under terms they never signed. According to reports from CoinDesk, the Eleventh Circuit granted a writ of mandamus on Wednesday, a rare remedy that forces a lower court to correct a clear error. The panel directed a Florida district court to vacate its arbitration order, allowing the case to proceed in federal court rather than through private arbitration.
Eight theft victims filed proposed class actions against Binance Holdings, BAM Trading Services (which operates Binance.US), and founder Changpeng Zhao. As reported by CoinDesk, none of them ever held a Binance account or accepted its Terms of Use. They allege criminals drained their wallets, then laundered the proceeds through the exchange. The complaints cite the Racketeer Influenced and Corrupt Organizations (RICO) Act, conversion, and consumer protection laws in California and Massachusetts. The plaintiffs say Binance ran an unlicensed money transfer business and disregarded the Bank Secrecy Act, which requires financial firms to detect and report suspicious transactions.
A judge in the Southern District of Florida sent the dispute to arbitration anyway, relying on equitable estoppel. According to the appeals court order reported by CoinDesk, the three-judge panel called this a misreading of the complaints. The panel noted that the claims rest on a 'duty otherwise imposed by law' rather than on Binance's terms. The procedural route matters significantly, as federal law bars appeals of orders compelling arbitration, making mandamus the victims' only exit after two years of fighting over the forum.
The compliance allegations track a record Binance has already admitted. As reported by CoinDesk, the exchange pleaded guilty in November 2023 to Bank Secrecy Act violations and running an unlicensed money transmitting business. It paid a $4.3 billion resolution, and prosecutors said it never filed a single suspicious activity report with FinCEN. Zhao admitted failing to maintain an anti-money laundering program and served a four-month prison sentence in 2024. The case now returns to the Southern District of Florida, where the civil RICO count allows triple damages if the victims prevail.
According to CoinDesk, the case represents a significant development for crypto exchanges and their arbitration clauses. David Silver from Silver Miller, representing the victims, noted that 'A contract you never signed shouldn't keep you out of court'. The ruling could have implications for other circuits facing similar questions about non-customers and exchange arbitration clauses. Binance's courtroom record remains mixed, with the exchange winning dismissal of terror financing claims in March but facing a $200 million UK lawsuit in June over leveraged trading losses.
