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Binance finds itself embroiled in another legal issue stemming from a 2022 event that resulted in a substantial loss of user funds.
Summary
- A Florida appeals court has reinstated a lawsuit alleging that Binance failed to freeze and recover approximately 1,000 BTC stolen in 2022.
- The ruling determined that Binance had sufficient contacts with the U.S. and Florida through its affiliates and infrastructure, reversing a lower court’s dismissal.
- The case will go back to trial court, increasing pressure on offshore exchanges facing similar negligence claims and lawsuits related to stolen assets.
A Florida appellate court has reopened a longstanding dispute involving Binance, stating the case warrants further examination.
As per a report by Bloomberg on Dec. 3, the Third District Court of Appeal in Florida has permitted a state-level lawsuit to proceed against Binance, citing its alleged failure to freeze and recover around 1,000 Bitcoin (BTC) stolen in 2022.
This renewed lawsuit gives the plaintiff an opportunity to argue that Binance Holdings Inc., despite its offshore status, possesses enough connections to Florida for the case to advance in local courts.
The initial court had dismissed the case due to lack of personal jurisdiction, but the appeals court concluded that Binance’s U.S.-based affiliates and its use of U.S. infrastructure established valid grounds for jurisdiction in Miami-Dade County.
Background of the case and potential implications
The lawsuit originated when the plaintiff, identified as Michael Osterer, reported an $80 million theft after hackers accessed and withdrew roughly 1,000 BTC from his wallet. He alleges that before Binance intervened, the hackers converted and extracted the stolen funds from a Binance account.
Osterer contends that the exchange exhibited negligence, breached its contractual obligations, and facilitated the laundering of stolen assets by failing to freeze user funds immediately upon notification of the theft. He seeks the full amount he lost, including interest.
Earlier in 2023, Osterer initiated a class-action suit on behalf of others whose assets were allegedly stolen and laundered through Binance. While a related federal money laundering case was shifted to Florida’s Southern District, the current ruling focuses specifically on Osterer’s claims under state law.
The appeals court firmly rejected Binance’s assertion of lacking a physical presence in Florida, asserting that hosting with Amazon Web Services and Binance’s operations in the U.S. constitute valid jurisdictional contacts.
Implications for crypto lawsuits across the country
This decision might motivate other plaintiffs to revive similar state-level actions against cryptocurrency exchanges. Binance is currently facing multiple lawsuits this year claiming it failed to safeguard or freeze stolen assets. This ruling could potentially weaken offshore exchanges’ reliance on jurisdictional defenses.
Binance may choose to appeal this ruling or seek arbitration, as it has done in previous cases. The matter now reverts to the trial court, where issues of merit, negligence, breach of contract, and recovery of stolen funds will be re-evaluated.
