- The U.S Supreme Court has turned down an appeal by Binance to overturn a class action lawsuit against the exchange
- Court’s decision fueled a price decline for BNB, which led to $1.9M in long liquidations
The U.S Supreme Court has denied an appeal filed by exchange giant Binance, with the same arguing that it is not subject to U.S securities laws as it does not have a physical headquarters in the country.
The denied appeal dealt a major blow to Binance Coin (BNB), which fell to a multi-week low of $660 before bouncing back to trade at $687 at press time.
Details of the case
This petition stemmed from a class action lawsuit that was filed against Binance in 2020. At the time, investors claimed that the exchange offered securities without being registered as a brokerage platform under U.S laws.
Binance denied these claims, arguing that it is not a U.S company and not subject to U.S regulations. In March 2022, Binance won the case and U.S District Judge Andrew Carter dismissed the lawsuit.
However, in March last year, this lawsuit was revived by the Manhattan Appeals Court. It ruled that despite Binance not having its headquarters in the U.S, it is still subject to securities laws because U.S investors bought tokens from the exchange through U.S servers.
Binance seeks an appeal
Binance appealed this decision in December 2024 before the U.S Supreme Court. The exchange claimed that technological innovations made it easier and more efficient for investors to access foreign financial markets. According to Binance,
“Where such opportunities were once reserved for those able to travel abroad, work with international investment firms, or establish offshore entities, the internet has helped afford the same access to investors with fewer resources.”
However, the U.S Supreme Court has denied this appeal, upholding the Manhattan Court’s ruling that U.S laws applied to the exchange. As a result of the same, the case will now proceed.
Impact on BNB
News of the denied appeal stirred BNB’s price volatility. In fact, data from Coinglass revealed that in just 24 hours, $2M worth of BNB open positions were liquidated, out of which $1.94M were long positions.
As long buyers are forced to sell BNB to close their positions, it exerts downward pressure on the price. Moreover, long traders are no longer willing to maintain their positions following a decline in funding rates.
At press time, BNB funding rates had flipped negative. This indicated that short traders are willing to pay funding fees to maintain their positions.
Is BNB ready for a recovery?
At press time, BNB seemed to be under intense selling pressure. For instance – The Chaikin Money Flow (CMF) indicator dropped to the negative zone for the first time in over three weeks.
The Average Directional Index (ADX) metric also tipped north, indicating that the prevailing downtrend has been gaining strength.
(Source: Tradingview)
Despite the selling activity, Binance Coin was still trading within a symmetrical triangle pattern. If it makes a bullish breakout from this pattern and flips resistance at the 0.5 Fibonacci level (706), it could invalidate the bearish trends. However, a breakout below the lower trendline could spur a drop towards $510.
One of the factors that could aid a bull run is the incoming leadership change at the US. Securities and Exchange Commission (SEC). Gary Gensler’s resignation as the SEC Chair could bode well for tokens that have previously been targeted by the commission.
