Binance Faces Renewed Litigation
In a significant legal development, Binance, the cryptocurrency exchange, finds itself embroiled in renewed litigation linked to a 2022 incident that resulted in substantial losses for users. On December 3, a report by Bloomberg revealed that Florida’s Third District Court of Appeal has decided to revive a lawsuit that had previously been dismissed, stating that the case warrants further examination.
The Lawsuit Details
The lawsuit, filed by Michael Osterer, reaches back to a theft that saw approximately 1,000 Bitcoin (BTC) stolen from his wallet, translating to an estimated $80 million in losses.
The crux of Osterer’s allegations against Binance centers on the company’s purported failure to take immediate action to freeze or retrieve the stolen cryptocurrency from the thieves who, as Osterer claims, used Binance to convert and withdraw the funds. Previously, a lower court dismissed the case due to questions regarding personal jurisdiction, but the appellate court ruled that Binance’s extensive operations and connections to the U.S. justify the pursuit of this lawsuit within Florida’s judicial system.
Jurisdiction and Legal Implications
This ruling opens the door for Osterer to argue that despite Binance’s international operations, its U.S. affiliates and reliance on American infrastructure provide legitimate grounds for jurisdiction. The appeal court notably rejected Binance’s defense that it lacked a physical presence in Florida, emphasizing that services hosted through Amazon Web Services alongside Binance’s actions in the U.S. contribute enough legal ties for the case to proceed in Miami-Dade County.
Class-Action Suit and Broader Impact
In addition to his original lawsuit, Osterer has also initiated a class-action suit representing other victims who believe their assets were similarly compromised and laundered via the exchange. While a related federal case about money laundering has been transitioned to the Southern District of Florida, the ruling now specifically hones in on Osterer’s claims under state law, potentially influencing other victims to consider similar legal actions against Binance and other platforms in the wake of these challenges.
This could signify a shift in the landscape for offshore exchanges, particularly in light of ongoing lawsuits claiming negligence in safeguarding user assets. Binance may respond by appealing this decision or seeking arbitration, a strategy it has employed in previous legal battles.
Looking Ahead
As the case reverts to trial court, critical discussions regarding the allegations of negligence, breach of contract, and recovery of the laundered funds are set to unfold.
