NEW YORK, March 8 (Reuters) - A federal appeals court on

Friday revived a lawsuit where investors accused Binance, the

world's largest cryptocurrency exchange, of violating U.S.

securities laws by selling unregistered tokens that lost much of

their value.

In a 3-0 decision, the 2nd U.S. Circuit Court of Appeals in

Manhattan said investors in the proposed class action plausibly

alleged that domestic securities laws applied because their

purchases of tokens had become irrevocable in the United States

once they paid for them.

Circuit Judge Alison Nathan said Binance's use of domestic

Amazon ( AMZN ) computer servers to host its platform supported this

outcome, given how Binance "notoriously denies the applicability

of any other country's securities regulation regime."

The appeals court also said investors could pursue claims

arising from purchases made within the year before they sued.

Friday's decision reversed a March 2022 ruling by U.S.

District Judge Andrew Carter in Manhattan, and returned the case

to him.

The appeal covered investors who had bought seven tokens -

ELF, EOS, FUN, ICX, OMG, QSP and TRX - through Binance starting

in 2017, and which soon lost much of their value.

They claimed that Binance failed to warn them about the

tokens' "significant risks" and sought to recoup what they paid.

Binance argued that U.S. securities laws did not apply

because its exchange was located outside the country.

It cited 2010 U.S. Supreme Court decision, Morrison v

National Australia Bank, that limited the extraterritorial reach

of domestic securities laws.

Binance and its lawyers did not immediately respond to

requests for comment. Lawyers for the investors did not

immediately respond to similar requests.

The case is separate from Binance's recent guilty plea and

more than $4.3 billion penalty for violating federal anti-money

laundering and sanctions laws.

Binance founder Changpeng Zhao pleaded guilty to related

money laundering violations and stepped down as chief executive.

His sentencing is scheduled for April 30.

The case is Lee et al v Binance et al, 2nd U.S. Circuit

Court of Appeals, No. U.S. District Court, Southern District of

New York, No. 22-972.