According to the United States appeals court, the district court's justification for dismissing the complaint against cryptocurrency exchange Binance was "erroneous."

An appeals court in the United States reversed a decision that had dismissed a class-action lawsuit filed by investors against the cryptocurrency exchange Binance.

A finding by the district court that rejected investors' allegations of transparency problems in Binance's sale of purported securities was reversed in favour of the investors, according to a March 8 petition with the United States Court of Appeals for the Second Circuit.

"We maintain that every justification used by the district court to reject the claims of the Plaintiffs that are now under appeal was flawed,"

On behalf of investors in a comparable scenario, Chase Williams filed the complaint in April 2020, claiming that Binance had entered into an agreement to sell assets without being registered as a broker-dealer or securities exchange.

Moreover, the investors have been attempting to terminate the agreements they made with Binance.

Plaintiffs seek damages alleging that Binance violated Section 12(a)(1) of the Securities Act of 1933 (Securities Act), 15 U.S.C. § 77l(a)(1), by illegally promoting, offering, and selling crypto-assets worth billions of dollars that weren't registered as securities.

The district court dismissed the lawsuit, citing the investors' claims as being untimely according to the relevant statutes of limitations.

However, the appeals court agrees with the plaintiffs claims that Binance is subject to domestic securities laws and their initial filing was timely.This comes as Binance continues to grapple with ongoing legal challenges from the U.S. securities regulator.

The U.S. Securities and Exchange Commission (SEC) has reportedly been "unable or unwilling" to respond to requests for information about the custody of customer assets, according to a story published on March 6 by Cointelegraph.

According to the SEC's lawsuit filed in June 2023, Binance, Binance.US, and its founder and former CEO Changpeng "CZ" Zhao traded unregistered securities and mixed customer assets in a different company that Zhao owned.

With the U.S. Department of Justice, Binance negotiated a $4.3 billion settlement in November 2023, acknowledging that it had broken laws against funding terrorism and money laundering.

Zhao entered a guilty plea to money laundering charges as part of the settlement, and his criminal sentence hearing is scheduled for April.