In a February 26, 2026 decision, Judge Carter of the Southern District of New York denied Binance’s motion to compel arbitration, exposing the company to the risk of a securities class action. The court found Binance had not clearly drafted the new arbitration provisions in its terms of use or effectively communicated those changes to customers. The ruling highlights three contract-formation principles: customers must be on notice to consent to arbitration, a class action waiver must be clear and unequivocal, and unilateral changes cannot apply retroactively without notice. The case stems from accounts opened in 2017–2018 and centers on the promotion, offering, and sale of digital tokens on Binance.com.
Plaintiffs alleged Binance violated federal and state securities laws by selling these tokens without registration and without registering as a broker-dealer, and that the value of many of those tokens has since collapsed. Binance amended its terms in February 2019 to add an arbitration agreement and a class-action waiver, posting the revised terms on a website page without providing individual notice. Applying California law, the court held the unilateral modification could not be retroactively applied and the arbitration clause was unenforceable for pre‑revision claims.
The court’s reasoning rested on the absence of adequate notice: simply posting revised terms on a website was insufficient and there was no indication of where to find amendments. The decision contrasted Binance’s approach with cases in which customers received direct notice, concluding that requiring daily or hourly checks would be absurd. The ruling underscores that notices, clarity, and alignment with state contract and consumer protection laws are central to enforcing arbitration clauses and class waivers. Platforms should use plain, unambiguous language and reliable notice methods to mitigate UDAP risk and update practices in line with governing law.
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