In a legal dispute initiated by Californian resident Nir Lahav, Binance CEO Changpeng Zhao and Binance.US face a class-action lawsuit.
Notably, this lawsuit alleges their role in the downfall of their competitor, FTX, and accuses them of multiple violations of federal and Californian laws related to unfair competition and attempts to monopolize the cryptocurrency industry.
The litigation revolves around a series of tweets by Changpeng Zhao in early November, just before FTX’s dramatic downfall. These tweets are believed to have significantly impacted FTX’s fate.
Binance CEO Faces Class-Action Lawsuit Amid Cryptocurrency Turmoil
On November 6, Zhao announced Binance’s decision to liquidate its FTX utility token FTT holdings, sending shockwaves through the cryptocurrency community.
Moreover, the following day, he tweeted about Binance’s intention to acquire FTX, but this commitment was withdrawn just a day later. The lawsuit alleges that these announcements and the subsequent reversal were aimed at harming FTX.
At the heart of the legal dispute is Zhao’s tweet on November 6. He stated;
“Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books.”
Furthermore, the lawsuit claims this statement was misleading because Binance had already divested its FTT holdings. The plaintiffs assert that this tweet was crafted to intentionally lower the market price of FTT.
Furthermore, the lawsuit underscores a statement in Zhao’s tweet where he stated, “We are not against anyone. But we won’t support people who lobby against other industry players behind their backs.” The plaintiffs view this statement as a sign of Binance opposing FTX CEO Sam Bankman-Fried’s “regulatory efforts.”
Consequently, the lawsuit seeks compensation through monetary damages, covering court expenses and the disgorgement of illicitly acquired profits. This claim is structured across seven counts, with the plaintiff suggesting that thousands could join the proposed class.
Additionally, In the background, Binance faces regulatory scrutiny by the U.S. Securities and Exchange Commission (SEC). This situation might shape the destiny of CZ’s cryptocurrency empire.