{"id":331143,"date":"2021-08-27T16:07:00","date_gmt":"2021-08-27T13:07:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/binance-lawsuit-claimants-mount-up-in-arbitration-for-decentralization\/"},"modified":"2021-08-27T16:07:00","modified_gmt":"2021-08-27T13:07:00","slug":"binance-lawsuit-claimants-mount-up-in-arbitration-for-decentralization","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/binance-lawsuit-claimants-mount-up-in-arbitration-for-decentralization\/","title":{"rendered":"# Binance lawsuit: Claimants mount up in arbitration for decentralization"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a30657debfe1\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a30657debfe1\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/binance-lawsuit-claimants-mount-up-in-arbitration-for-decentralization\/#A_cloak_of_decentralization\" >A cloak of decentralization?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/binance-lawsuit-claimants-mount-up-in-arbitration-for-decentralization\/#The_happy_wanderer\" >The happy wanderer<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/binance-lawsuit-claimants-mount-up-in-arbitration-for-decentralization\/#No_witch_hunt\" >No witch hunt<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/binance-lawsuit-claimants-mount-up-in-arbitration-for-decentralization\/#User_disagreement\" >User disagreement<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Binance lawsuit: Claimants mount up in arbitration for decentralization  <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDgvN2U3YjJmMjktZjllNS00NzFlLWFjYWUtNzIyYTBhYjdmNjQyLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-128018ef>When does decentralization stop being an experiment in technological democracy and start being a way to avoid accountability?<\/p>\n<p>That\u2019s the question at the heart of a potential $100 million arbitration lawsuit against cryptocurrency exchange Binance, where close to 1,000 traders seek damages for losses <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/fortune.com\/2021\/05\/19\/coinbase-binance-outage-crypto-bitcoin-crash\/\">suffered<\/a> during the site\u2019s outage on May 19.\u00a0<\/p>\n<p>Binance experienced technical issues for several hours on May 19 amid one of the worst market crashes of the year as the global cryptocurrency market suffered a 33% drop. Traders were unable to execute trades for the duration of Binance\u2019s outage, and many found their accounts depleted when the site came back online.<\/p>\n<p>Binance\u2019s click-through terms of use <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.binance.com\/en\/terms\">absolve<\/a> it of any responsibility for losses incurred by new users upon registering with the exchange. The company has no official headquarters and isn\u2019t registered or regulated in any jurisdiction.<\/p>\n<p>Hundreds of users have added their names to the case since it was announced on Aug. 19, said David Kay of Liti Capital, who leads the steering and advisory committee directing the arbitration on behalf of the claimants.<\/p>\n<p>Of the 700+ original claimants, only six claim damages of more than $20 million. But Kay believes the total amount lost by traders during May 19\u2019s blackout could be more than $100 million.\u00a0<\/p>\n<h2><span class=\"ez-toc-section\" id=\"A_cloak_of_decentralization\"><\/span>A cloak of decentralization?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Speaking to Cointelegraph, Kay said that Binance had self-<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lied the \u201cdecentralized\u201d label to great effect during its time as the world\u2019s largest cryptocurrency exchange, but only to further its aims. He said:<\/p>\n<blockquote><p>\u201cBinance tries to cloak itself as a community asset, which it\u2019s not. It\u2019s a corporation utilizing community assets. [\u2026] It\u2019s done a good job of blurring the lines, and wrapping itself in the idea of decentralization.\u201d<\/p><\/blockquote>\n<p>Kay suggested that Binance used the notion of decentralization to carve dividing lines through the cryptocurrency community by fostering an \u201cin-group\/out-group\u201d mentality, stating: \u201cBinance will point to the fact it has no headquarters, the fact that it\u2019s not regulated, and say: \u2018If you\u2019re against us, you\u2019re against that [decentralization].\u2019\u201d<\/p>\n<p>Binance founder and CEO Changpeng Zhao has eschewed the notion that the exchange requires an official headquarters, noting that Bitcoin (BTC) itself has no base of operations. Addressing an audience at Ethereal Summit 2020, Zhao <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.youtube.com\/watch?v=O0pqegq2jpM\">said<\/a> Binance\u2019s office was wherever he and his team happened to operate from at the time:<\/p>\n<blockquote><p>\u201cWhere\u2019s the Bitcoin office? Bitcoin doesn\u2019t have an office. [&#8230;] Wherever I sit is going to be the Binance office. Wherever I need somebody is going to be the Binance office.\u201d<\/p><\/blockquote>\n<p>Binance processes around $25 billion worth of cryptocurrency trades daily and has seen over $2 trillion move through its exchange to date. Its margin trading platform allows users to leverage trades to up to 125x their original holdings \u2014 a practice that has been banned by regulators in the United States and the United Kingdom.<\/p>\n<p>In November 2020, Coinbase disabled margin trading on its professional trading platform following official guidance from the United States Commodity Futures Trading Commission. But Binance, along with numerous other unregulated cryptocurrency exchanges, continued to offer high-risk trading products.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_happy_wanderer\"><\/span>The happy wanderer<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Traders who suffered undue losses while using Binance\u2019s systems have had few options to launch \u2014 let alone resolve \u2014 legal action against the company. As the exchange hopped from China, Japan and Malta over the past several years (settling nowhere), its customers had no recognized arena from which to base a legal case.<\/p>\n<p>Binance has since added a stipulation to its terms and conditions stating it would agree to hear claims made against it in the Hong Kong International Arbitration Centre. The HKIAC is very expensive for individuals to launch small claims in, with each case <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.hkiac.org\/arbitration\/fees\/procedure-fees\">incurring<\/a> a $65,000 fee simply to begin proceedings. What\u2019s more, claims can only be made on an individual basis, precluding the possibility of class-action lawsuits.<\/p>\n<p>The prohibitive cost of using the arbitration court effectively prices most users out of ever making a claim against the exchange. One claimant, who wishes to be known only as Jean-Jacques, lost over $10,000 the day Binance went down \u2014 an amount he\u2019d be forced to pay many times over to use the Hong Kong court as an arbiter.<\/p>\n<p>Other individuals lost funds ranging between $100 and $12 million on May 19, and on other dates before and since. Kate Marie, a healthcare consultant and author from Sydney, Australia, lost between $160,000 and $250,000 when she couldn\u2019t access her futures trading account during the site outage. Marie said:<\/p>\n<blockquote><p>\u201cI couldn&#8217;t adequately manage my futures account and got liquidated rapidly, and without warning, my margin status had changed. Also happened again on the 23rd, even though I had safety measures in place. This was going to set me up for life.\u201d<\/p><\/blockquote>\n<p>Retail trader Fawaz Ahmed of Toronto, Canada, lost out on 3,300 Ether (ETH) (worth around $6 million at the time) because the site\u2019s user interface froze and stopped him from closing out his position. Ahmed described experiencing symptoms of serious depression following the crash.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"No_witch_hunt\"><\/span>No witch hunt<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Kay stressed that the arbitration against Binance isn\u2019t a witch hunt. He recognizes the utility that such a platform can bring to the cryptocurrency space but believes that a line has to be drawn in the sand.<\/p>\n<p>\u201cWe are not anti-Binance. We are pro-Binance. Binance can still be good for the community. This is about the fact that we all make mistakes, but that ultimately, those mistakes have to be rectified. We don\u2019t want to destroy Binance, but this needs to be cleaned up,\u201d said Kay.<\/p>\n<p>Liti Capital, the group Kay heads up, is front-running the cost of the arbitration and will be compensated with a share of the damages awarded should the proceedings be judged in the claimants\u2019 favor.\u00a0<\/p>\n<p>The claimants aim to question the enforceability of Binance\u2019s click-through terms of use, which Kay said doesn\u2019t constitute a negotiated contract. The group will also look to challenge the idea that claims can only be made individually in the Hong Kong IAC, but Kay said they are also prepared to fight each claim one by one if they have to.<\/p>\n<p>\u201cWe won\u2019t stop if we have to bring lawsuits on them individually,\u201d he said.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"User_disagreement\"><\/span>User disagreement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Carol Goforth, a law professor at the University of Arkansas, said click-through terms of use are common in the world of e-commerce and could form part of a legally binding contract, assuming the terms are reasonable. Goforth told Cointelegraph:<\/p>\n<blockquote><p>\u201cIf the terms are reasonably conspicuous and you really do have to click through a link that warns you that you are agreeing to terms of the site, they can indeed become part of the contract.\u201d<\/p><\/blockquote>\n<p>The user agreement could potentially be nullified, said Goforth, if the claimants show that the terms were unconscionable. This means they\u2019d have to show the contract was unfair or abusive during its formation.<\/p>\n<p>Binance had little to say about the prospect of the arbitration at the time of writing. A spokesperson told Cointelegraph, \u201cWe are committed to the legal process to resolve disputes and we do not comment on pending legal matters.\u201d\u00a0<\/p>\n<p>The exchange was the target of heavy regulatory and legal <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.cnbc.com\/2021\/07\/27\/binance-ceo-says-willing-to-step-down-amid-crypto-crackdown.html\">scrutiny<\/a> during summer 2021, as <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2021-05-13\/binance-probed-by-u-s-as-money-laundering-tax-sleuths-bore-in\">authorities<\/a> in the United States, the United Kingdom, France, India, Japan, the Cayman Islands and more sought to either ban its trading products or pursue the exchange and its subsidiaries for violating national law. Binance has since shut down some of its leveraged trading products and has <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/fortune.com\/2021\/06\/28\/fca-united-kingdom-binance-markets-ban-crypto\/?queryly=related_article\">ceased<\/a> offering its services to customers in certain jurisdictions.<\/p>\n<p>The claimants lending their weight to the arbitration say they are doing so for a wide number of reasons. For some, including Kay, it\u2019s about removing the false cloak of decentralization that Binance has used to disguise itself for so long.\u00a0<\/p>\n<p>\u201cImagine if Amazon said, \u2018Sorry, our workers and customers can never sue us, because we\u2019re part of the internet \u2014 and the internet is to stay deregulated,\u2019\u201d stated Kay. \u201cThat doesn\u2019t work.\u201d\u00a0<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/binance-lawsuit-claimants-mount-up-in-arbitration-for-decentralization\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Binance lawsuit: Claimants mount up in arbitration for decentralization &#8221; When does decentralization stop being an experiment in technological democracy and start being a way to avoid accountability? That\u2019s the question at the heart of a potential $100 million arbitration lawsuit against cryptocurrency exchange Binance, where close to 1,000 traders seek damages for losses&#8230;<\/p>\n","protected":false},"author":1,"featured_media":331144,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDgvN2U3YjJmMjktZjllNS00NzFlLWFjYWUtNzIyYTBhYjdmNjQyLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[75014,74858,74860,71511,55229,70934],"class_list":["post-331143","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-binance","tag-bitcoin-regulation","tag-cryptocurrency-exchange","tag-government","tag-law","tag-regulation"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/331143","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=331143"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/331143\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/331144"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=331143"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=331143"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=331143"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}