US Court of Appeals reboots HEX manipulation case against Binance.US

A United States appeals court has partially reversed the dismissal of a proposed class-action lawsuit against Binance.US which alleges the exchange unlawfully manipulated the price of the HEX token. 

A panel of three judges in the Ninth Circuit reversed a district court’s previous dismissal of the class action suit, saying the plaintiff, Ryan Cox, had made justifiable claims against Binance.US and CoinMarketCap. 

Cox first filed the class-action lawsuit in 2021, alleging that Binance Capital Management and Binance.US artificially restricted HEX’s ranking on CoinMarketCap — a cryptocurrency price-tracking platform that Binance owns.

Cox claimed this resulted in HEX trading at a lower price while Binance’s own cryptocurrencies were ranked higher.

A district court judge first dismissed the lawsuit in February 2023, finding that Cox had failed to make any concrete links between specific activity in Arizona and Binance.US, which would link Binance.US to the manipulation of HEX.

In an Aug. 12 opinion, the judges disagreed with the district court’s original conclusion that Cox had to establish “sufficient minimum contacts” between Binance.US and Arizona — the state Cox first filed the lawsuit — for a court to establish personal jurisdiction.

The panel concluded that the district court has personal jurisdiction over the suit’s United States-based defendants since they have sufficient contacts with the US more broadly.

“Given that each company is incorporated or has a principal place of business in the United States, each has sufficient contacts with the United States to satisfy due process,” read the opinion.

Personal jurisdiction refers to a court’s authority to make formal judgments on the rights and liability of the defendants, in this case, Binance.US and CoinMarketCap.

Additionally, the appeals court also found that Cox’s suit made justifiable price manipulation claims against Binance.US and noted they had been remanded for ongoing legal proceedings.

HEX was launched in December 2019 by its creator, Richard Heart.

The SEC sued Heart on July 31, 2023, for violating federal securities laws and defrauding investors out of “at least” $12.1 million both in the US and overseas.

The SEC claimed that instead of using investor funds to develop or market the HEX token, Heart used the capital to fund personal luxury purchases, including a “555-carat diamond, expensive watches, and high-end automobiles.”

The HEX token is currently trading for $0.004, down over 99% from its all-time high of $0.51, which it hit in September 2021.