Eight crypto theft victims who sued Binance Holdings, BAM Trading Services, and founder Changpeng Zhao will get to pursue their case in federal court rather than private arbitration, after the Eleventh Circuit Court of Appeals granted an extraordinary writ of mandamus on August 19, 2026, directing the lower court to vacate its arbitration order.
The plaintiffs allege violations of the Racketeer Influenced and Corrupt Organizations Act and failures in Binance's anti-money-laundering compliance, tied to funds they say were stolen and funneled through the exchange. None of the eight ever opened a Binance account, which became the crux of the appeal.
Why the Arbitration Order Was Overturned
A Florida district judge had compelled arbitration on March 16, 2026, applying Binance's account terms of service to the case. The appellate panel disagreed, ruling that non-users cannot be bound by arbitration clauses in a contract they never signed, and found that the district court had misread the underlying complaints. That reasoning tracks a broader pattern in crypto litigation: courts have grown more reluctant to let exchanges stretch their terms-of-service agreements to cover people who were never their customers in the first place, a dynamic that has been showing up across crypto-industry legal fights against regulators and platforms alike this year.
Related: Two More Crypto Groups Sue Illinois Over 0.2% Digital Asset Tax
What the Ruling Doesn't Decide
The mandamus order is narrow. It does not determine whether Binance is liable, does not establish that RICO violations occurred, and does not resolve the anti-money-laundering compliance claims or award any damages. What it does is send the case back to district court for litigation on the merits, giving the plaintiffs the discovery tools and public record that arbitration would have denied them.
Broader Exposure for Exchanges
The ruling lands as U.S. regulators are separately signaling a friendlier posture toward the industry — a shift SEC Commissioner Mark Uyeda has attributed to a deliberate prior-administration strategy of keeping crypto out of the US that the current Commission is trying to unwind. But looser federal enforcement doesn't shield exchanges from private litigation, and this decision specifically widens the door for non-account-holders to sue in open court instead of arbitration. Other circuits are likely to face the same question soon, and a pattern of rulings against forced arbitration would raise the discovery and litigation exposure for Binance and other platforms accused of facilitating theft or laundering, regardless of whether the underlying claims ultimately succeed.
