The Supreme Court of Canada will not hear an appeal from crypto firm Binance Holdings Ltd., which sought to stay a proposed investor class action against the company — arguing that investors agreed to resolve their disputes with the company in arbitration.
In 2022, a pair of investors launched a proposed class action against Binance, on behalf of investors who traded on the platform between 2019 and 2022, seeking damages against the company for selling derivatives without registration or a prospectus. The case has been certified as a class action, but the allegations have not been proven.
Binance sought a stay of the case, arguing that investors that used the platform agreed to resolve disputes by arbitration, based on the terms of the user contract set out on its website.
However, the Ontario Superior Court of Justice rejected that argument, finding that the arbitration clause was “contrary to public policy and unconscionable,” for various reasons.
Among other things, the court cited the fact that the arbitration clause was buried in 50 pages of terms and conditions that users were required to agree to when opening an account online; that the clause gave the company broad power to alter the arbitration agreement; and that it repeatedly changed the forum for arbitrating disputes, ultimately to a jurisdiction where the process is prohibitively expensive for smaller claims.
“Binance, as the party that designed and whose professionals drafted the contract, engineered the arrangement to take advantage of the complexity that was hidden behind that superficially benign appearance of an arbitration clause,” the motion judge noted.
The company appealed that ruling to Court of Appeal for Ontario, which rejected it, finding that there was no reversible error in the motion judge’s decision.
“We see no palpable and overriding error in the motion judge considering the issues of public policy and unconscionability on the basis of the typical cryptocurrency investor and the nature of disputes likely to arise under the arbitration clause,” the appeal court said in its decision.
Binance sought to appeal that ruling to the Supreme Court, which has now decided not to hear the case, and denied leave to appeal.