US Appeals Court Allows 8 Bitcoin (BTC) Theft Victims to Sue Binance

A US federal appeals court has cleared the way for eight victims of cryptocurrency theft to sue Binance in federal court, rejecting the exchange's bid to force their claims into arbitration under user terms they never accepted. The Eleventh Circuit granted a writ of mandamus on Wednesday, a rarely used remedy that instructs a lower court to correct a clear legal error, and directed a Florida district court to vacate its earlier arbitration order. The eight plaintiffs filed proposed class actions against Binance Holdings, BAM Trading Services — the operator of Binance.US — and founder Changpeng Zhao, alleging that criminals drained their wallets and laundered the proceeds through the exchange. None of them ever held a Binance account or agreed to its Terms of Use. Their complaints invoke the Racketeer Influenced and Corrupt Organizations Act, conversion and consumer-protection statutes in California and Massachusetts, and accuse Binance of operating an unlicensed money-transmitting business while disregarding Bank Secrecy Act obligations. A judge in the Southern District of Florida had previously sent the dispute to arbitration on the theory of equitable estoppel, which can bind non-signatories to a contract when they benefit from it. The three-judge panel disagreed, saying the claims arise from a duty otherwise imposed by law rather than from Binance's terms. Because federal law bars immediate appeals of arbitration orders, the victims had to pursue mandamus after two years of fighting over the forum; Binance had pushed for arbitration in Hong Kong, one case at a time. The panel also credited evidence that the plaintiffs would forfeit their claims and face unreasonable costs abroad. The decision applies to stolen digital assets generally, giving holders of Bitcoin (BTC) and altcoins a clearer route into US court at a time when exchange liability is under scrutiny.

The procedural posture was anything but routine. Because federal law blocks immediate appeals of arbitration orders, mandamus represented the victims' only remaining exit after their two-year fight over where the claims would be heard. The plaintiffs' firm said Binance had directed them to arbitrate in Hong Kong, one case at a time, and the panel accepted evidence that they would lose claims and bear unreasonable costs under that arrangement. The compliance allegations track a record the exchange has already acknowledged. Binance pleaded guilty in November 2023 to Bank Secrecy Act violations and running an unlicensed money-transmitting business, agreeing to a $4.3 billion resolution, while prosecutors said it never filed a single suspicious activity report with FinCEN. Zhao admitted to failing to maintain an anti-money laundering program and served a four-month prison sentence in 2024. The speed of laundering helps explain why victims pursue exchanges rather than unidentified thieves, with one review of 255 hacks worth $4.04 billion finding that stolen funds can move within two seconds of an attack. Binance's courtroom record remains mixed: it secured dismissal of terror-financing claims in March, yet investors filed a $200 million UK lawsuit in June over leveraged-trading losses. The Eleventh Circuit did not decide whether the exchange violated RICO, conversion or consumer-protection law; it held only that arbitration was the wrong forum. Still, the ruling shifts leverage to plaintiffs, and other circuits may soon face the same question about whether arbitration clauses can bind people who never signed them. The case returns to the Southern District of Florida, where the civil RICO count allows triple damages if the eight plaintiffs prevail. Lawyers for the victims framed the decision as a victory for ordinary users, arguing that a contract you never signed shouldn't keep you out of court.

The through-line in this ruling is accountability: courts are increasingly unwilling to let exchanges use unsigned contracts to shield themselves from US liability. The Eleventh Circuit's mandamus order grounds the decision in a duty otherwise imposed by law — rooted in Bank Secrecy Act and anti-money-laundering obligations — rather than in Binance's user agreement, making the ruling a legal precedent with triple damages potentially on the table. More than an airdrop or an all-time high market milestone, this is a structural shift for how exchange liability is litigated, with implications that extend from Bitcoin (BTC) to altcoins and algorithmic stablecoins. The district court must now vacate the arbitration order and hear the RICO claims on the merits.