A court in the United Kingdom recently ruled that an order restricting Binance, a cryptocurrency exchange, was not valid. The order was given without telling Binance beforehand, and it was also too late to stop since the stolen cryptocurrency had already been moved.
Binance Wins in Court, Rejects ‘Proprietary Injunction’ and Claims $114k in Legal Costs
A court in the UK recently decided that a law, which made Binance hold onto some of its cryptocurrency, was not valid. This happened because someone said that their stolen cryptocurrency had been sent to Binance for trading.
Recently, a law firm called Herbert Smith Freehills posted something really cool – the first known case in which a cryptocurrency exchange company was successful in fighting against an order to stop them from using 470,904 US Dollars (USD) worth of coins. This order was handed down on October 18th, 2022 and is known as a “proprietary injunction”.
Binance was given an order, but asked to have it taken back. The crypto exchange said that they weren’t told about the order and that by the time it was given, their money had already been moved somewhere else so they couldn’t follow through with it.
Binance said it was impossible to follow the court order because all of the relevant USDT had already been moved around and mixed up with other money before it received the order. Then, the high court told the claimant (the person who filed the original lawsuit) to pay Binance $114,000 for its legal costs.
Don’t Forget the Difference
In a blog post, the law firm discussed two different ways to stop someone from using a crypto exchange – getting an injunction against the account owner and serving it to the exchange as a third party, versus identifying the crypto exchange as a respondent.
A law firm argued that if someone gets an injunction, or rule from a court, against the cryptocurrency exchange and it is discharged later, it may cause big problems for the person who was scammed. Before asking for an injunction, legal advisers should remember that a cryptocurrency exchange is different than other people in court.
If lawyers are making a legal case against someone, they should make sure that there are things that can be used as evidence before they take it to court. People can give their opinions about this in the comment section below.