Binance Faces Lawsuit for Allegedly Breaking Securities Laws

[] 2 months ago

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Top crypto exchange Binance is facing a lawsuit that alleges it violated securities and competition laws for attempts to monopolize the cryptocurrency platform market, Bloomberg reported.

The lawsuit cited a series of tweets sent by Binance CEO Changpeng "CZ" Zhao in early November, soon before FTX's demise. These tweets are said to have had a substantial impact on the fate of FTX.

Zhao is accused of inciting a customer run on FTX after raising concerns about the FTX-issued cryptocurrency token FTT, and on Nov. 6, Zhao revealed Binance's decision to liquidate its holdings in the FTX utility token FTT.

According to a proposed class action filed Monday in the U.S. District Court for the Northern District of California, plaintiff Nir Lahav, a crypto investor, accused Binance of violating the Securities Exchange Act as well as California's Unfair Competition Law by impeding competitor trading platforms operated by entities of rival FTX.Lahav v. Binance Holdings Limited, N.D. Cal., No. 4:23-cv-05038, 10/2/23.

The class action is intended to include everyone who invested in FTX before Nov. 6, 2022, and after Nov. 8, 2022, "during the time period of volatility." Last year, FTX declared bankruptcy after Binance backed out of a plan to acquire it.

Meanwhile, Sam Bankman-Fried, the former CEO of FTX, is expected to go on trial on Tuesday on charges of stealing billions of dollars from users of his FTX cryptocurrency exchange, over a year after the company's collapse stunned markets and tainted his reputation.

According to federal prosecutors, the 31-year-old former billionaire stole from FTX clients from FTX's inception in 2019 until its bankruptcy in November 2022 to support his hedge fund Alameda Research, buy luxurious residences and other uses.