Binance Decision Clarifies Extraterritorial Application Of U.S. Securities Laws To Digital Asset Transactions

On March 31, 2022, the United States District Court for the Southern District of New York dismissed claims brought by U.S. residents trading on the Binance digital exchange, holding that the plaintiffs' purchases of digital tokens were extraterritorial transactions to which U.S. federal and state securities laws do not apply.¹ This ruling brings significantly more clarity to digital asset providers seeking to understand the parameters of U.S. jurisdiction claims. It also gives more credibility to the notion that offshore companies can access U.S.-based computer infrastructure without subjecting themselves to U.S. jurisdiction.

Binance operates on a decentralized basis, so the location of its principal place of business for jurisdictional purposes was a significant factual issue in the litigation. The court addressed Binance's location only by noting that its headquarters are in Malta.²