In a recent development, a class-action lawsuit has been lodged against Binance US and its CEO, Changpeng Zhao, in the California District Court. This legal action follows in the wake of a previous lawsuit by the SEC against Binance, its US subsidiary, and CZ.
Adding another layer to the legal saga, this class-action lawsuit also names BAM Trading and BAM Management, the entities behind Binance US, as defendants. The plaintiffs behind the suit argue that CZ's social media posts were instrumental in triggering the collapse of FTX, which declared bankruptcy in November 2022.
Furthermore, the plaintiffs accuse Binance and CZ of attempting to monopolize the cryptocurrency market through actions detrimental to their rival, FTX. They contend that these actions violate competition regulations.
An intriguing aspect of this case is CZ's Twitter posts. Before FTX filed for bankruptcy, CZ suggested that Binance was in negotiations to acquire FTX. However, he subsequently announced Binance's withdrawal from the purchase. The plaintiffs assert that CZ's public announcements were designed to harm FTX deliberately, ultimately leading to its bankruptcy and the collapse of its token, FTT.
Additionally, the plaintiffs highlight CZ's post about liquidating all FTT tokens in Binance's portfolio, alleging that CZ's actions were manipulative and led to market distortions.
Binance Faces Lawsuit for Monopoly Attempts
Binance Holdings Ltd. is currently embroiled in a lawsuit alleging violations of securities and competition laws. The suit accuses Binance of seeking to monopolize the cryptocurrency platform market, with plaintiff Nir Lahav, a cryptocurrency investor, claiming that Binance hindered competitor trading platforms affiliated with rival FTX.
The proposed class action, filed in the US District Court for the Northern District of California, aims to represent those who invested with FTX during specific periods of volatility. FTX had declared bankruptcy after Binance reneged on an acquisition deal.
The complaint highlights the openly acknowledged rivalry and animosity between Binance and FTX, asserting that CZ did not hesitate to trigger the collapse of FTX entities' stock in the market when the opportunity presented itself. CZ's comments about FTX's FTT token are also under scrutiny.
Binance, the world's largest cryptocurrency exchange by volume, has faced not only this lawsuit but also action from the Securities and Exchange Commission (SEC). The SEC alleges mishandling of customer funds and violations of securities regulations.
Allegations of Market Manipulation
In California federal court, a class-action lawsuit has been filed against Binance and its CEO Changpeng Zhao (CZ). The lawsuit, initiated by an FTX user who suffered losses when FTX filed for bankruptcy, alleges that Binance, which held a stake in FTX's FTT token, made false statements about selling that stake. This caused a decline in FTT's price.
The lawsuit contends that CZ deliberately misled the market to undermine confidence in FTX and subsequently made misleading statements about Binance's intention to acquire FTX, impacting FTT's price further.
The legal action accuses Binance and CZ of unfair competition, market manipulation, fraudulent practices, and making false statements, all driven by animosity towards FTX and its advocacy for increased crypto regulation. The lawsuit seeks damages for FTX users unable to access their funds and the disgorgement of Binance's alleged gains at FTX's expense.
Binance and CZ have not yet commented on the lawsuit, highlighting the ongoing regulatory uncertainty in the cryptocurrency space as these disputes play out in court.
Circle Weighs in on SEC vs. Binance Lawsuit
As these legal battles unfold, Circle, the issuer of the stablecoin USD Coin (USDC), has entered the fray. The US Securities and Exchange Commission (SEC) filed a lawsuit against Binance for offering unregistered securities, including BNB and BUSD provided by BAM Trading, a Binance affiliate. CZ and Binance have faced these allegations since June.
In response, Circle has asserted that its stablecoin, USDC, does not fall under the category of securities. Circle argues that USDC holders do not anticipate profits from this part of their portfolio, and the design of USDC does not meet the essential criteria of an investment contract, thus falling outside the SEC's jurisdiction.
The continuing series of legal battles with Binance, FTX, Coinbase, and others truly underlines the growing regulatory storm in the Crypto Industry. While it's still unclear where things will end, it's clear that as these cases unfold, the repercussions could reshape the future of the entire cryptocurrency landscape.