Binance.US and its CEO, Changpeng Zhao, are facing a legal showdown as a collective lawsuit was recently filed against them in the Northern California District Court. The lawsuit, initiated by California resident Nir Lahav, alleges unfair competition and attempts to monopolize the cryptocurrency market, with a specific focus on undermining their competitor, FTX.
The core of the lawsuit revolves around tweets made by CEO Zhao in early November. On November 6th, Zhao publicly announced Binance's decision to divest its holdings in FTX's utility token, FTT. The plaintiffs claim that this announcement was not only misleading but was also made with malicious intent. They argue that Binance had already sold its FTT holdings before the tweet, which was strategically designed to depress FTT's market price.
Additionally, Zhao's tweet, expressing hesitancy to "support people who lobby against other industry players behind their backs," was interpreted by the plaintiffs as a veiled criticism of FTX CEO Sam Bankman-Fried's regulatory efforts.
The lawsuit asserts that Zhao's actions were not isolated incidents but part of a broader strategy to destabilize FTX. The subsequent sharp drop in FTT's price, from US $23.1510 to US $3.1468, pushed FTX into bankruptcy, leaving its executives in disarray.
The plaintiffs argue that this was a deliberate attempt to disable a competitor and strengthen Binance's market position. The lawsuit seeks monetary damages, court costs, and disgorgement of ill-gotten gains across seven counts, with the potential for thousands to join the class action.
It's important to note that both Binance and FTX are also facing separate legal actions by the Securities and Exchange Commission (SEC), further complicating the cryptocurrency exchange landscape. Bankman-Fried's criminal case is scheduled to begin on October 4th in New York, while Binance is under scrutiny by the SEC, facing its own set of challenges.
In a related development, Paradigm, a crypto venture capital firm, has criticized the SEC for allegedly bypassing the rule-making process in its case against Binance, accusing the regulatory body of overstepping its jurisdiction.
_____________________________________________________________________Disclaimer: The information contained in this website is for general informational purposes only. The content provided on this website, including articles, blog posts, opinions, and analysis related to blockchain technology and cryptocurrencies, is not intended as financial or investment advice. The website and its content should not be relied upon for making financial decisions. Read full disclaimer and privacy Policy.
For Press Releases, project updates and guest posts publishing with us, email to contact@etherworld.co.
Subscribe to EtherWorld YouTube channel for ELI5 content.
Share if you like the content. Donate at avarch.eth or Gitcoin
You've something to share with the blockchain community, join us on Discord!