Binance CEO Faces Class-Action Lawsuit Alleging Role in FTX’s Downfall
Binance CEO Changpeng Zhao and Binance.US are currently facing a class-action lawsuit filed by a California resident, Nir Lahav. The lawsuit accuses them of causing the collapse of rival exchange FTX and violating federal and California laws related to unfair competition and monopolizing the cryptocurrency market.
The Lawsuit Claims CZ’s Tweets Harmed FTX
The lawsuit revolves around a series of tweets made by Changpeng Zhao in early November, just before FTX’s dramatic collapse. These tweets are alleged to have had a significant impact on FTX’s fate. On November 6, Zhao announced Binance’s decision to liquidate its holdings in the FTX utility token FTT, which created shockwaves in the crypto community.
The plaintiffs estimate that Binance held up to 5% of all FTT tokens. The next day, Zhao tweeted about Binance’s intent to acquire FTX but retracted the commitment a day later. The lawsuit claims that these actions were intended to harm FTX and played a pivotal role in its collapse.
Key Points of Contention
The lawsuit highlights several key points of contention, including a tweet where Zhao stated that Binance would liquidate its remaining FTT holdings. The plaintiffs argue that this statement was false and misleading as Binance had already divested its FTT holdings, suggesting it was intended to drive down the price of FTT.
Additionally, the lawsuit points to another tweet where Zhao mentioned not supporting people who lobby against other industry players behind their backs, interpreting it as Binance opposing FTX CEO Sam Bankman-Fried’s “regulatory efforts.”
Potential Class-Action Members
The lawsuit seeks monetary damages, court costs, and the disgorgement of ill-gotten gains based on seven counts. The plaintiff believes there could be thousands of members in the proposed class. Binance is also currently facing regulatory scrutiny from the U.S. Securities and Exchange Commission (SEC), which could determine the fate of CZ’s crypto empire.
Hot Take: Lawsuit Challenges Binance’s Actions in FTX’s Collapse
A class-action lawsuit has been filed against Binance CEO Changpeng Zhao and Binance.US, alleging their involvement in causing the downfall of rival exchange FTX. The lawsuit claims that Zhao’s tweets, including announcements about liquidating FTT holdings and acquiring FTX, played a significant role in FTX’s collapse. It argues that these actions were intended to harm FTX and violated federal and California laws related to unfair competition and monopolizing the cryptocurrency market. The lawsuit seeks monetary damages and disgorgement of ill-gotten gains. This legal challenge comes at a time when Binance is already facing regulatory scrutiny from the SEC, raising further concerns about the fate of CZ’s crypto empire.
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