US customers are turning against Binance
The world’s largest trading platform for digital currencies is facing further legal trouble in the US: Just a week after a US regulator accused Binance of circumventing trading rules, the crypto exchange is facing a billion-dollar class action lawsuit in a Florida federal court. The lawsuit, filed on Friday, alleges that the company, some executives and prominent influencers traded unregistered securities and unlawfully promoted the tokens on social media.
The lawsuit is being pushed by the law firms Moskowitz and Bois Schiller Flexner. In addition to Binance, they are also demanding damages of one billion US dollars from CEO Changpeng Zhao, basketball star Jimmy Butler, Youtuber Graham Stephan and Ben Armstrong (Bitboy Crypto). The lawyers explained opposite fortuneto include more Binance influencers in the class action lawsuit.
Behind the lawsuit are three investors who are said to have lost money using cryptocurrencies promoted by Binance and the influencers. However, the class action lawsuit aims to find even more people who have messed up trading on the crypto exchange. If successful, the number of plaintiffs “could be in the millions,” according to the lawsuit.
The two firms have already filed several lawsuits against crypto companies, including a class-action lawsuit against crypto exchange Voyager, which is looking to acquire Binance, and two class-action lawsuits against FTX. In these cases, too, the lawyers not only take action against the companies, but also against influencers who had advertised for them.
Moskowitz is also suing US football star Tom Brady, supermodel Gisele Bundchen and FTX founder Sam Bankman-Fried. They had all advertised for the crypto exchange FTX and are said to have made “distorting” advertising claims. The celebrities also violated Florida’s securities and consumer protection laws by not detailing the compensation they received in exchange for their endorsements.
Binance has benefited from the same advertising and sales of unregistered securities as FTX and Voyager and “even perfected the pyramid advertising-influencer structure that has reinforced these practices,” said attorney Adam Moskowitz, representing the case.
Just last week, the Commodities Futures Trading Commission (CFTC) accused Binance of offering certain businesses and services in the US without having the necessary license. In addition, the crypto exchange is said to have deliberately circumvented applicable rules on money laundering prevention and the prevention of criminal financial transactions as well as compliance regulations. Accordingly, Binance has encouraged US customers to use VPNs and create fake reports to combat money laundering. In addition, the crypto exchange is said to have relocated its business activities out of the United States in only formal terms in order to escape strict financial regulation and trading rules.
In addition to the company, the CFTC lawsuit is also directed against CEO Zhao and the former compliance chief Samuel Lim. Although they are not threatened with criminal proceedings, the supervisory authority can order the confiscation of assets, impose severe fines and a permanent ban on trading and registration speak out against the company.
Binance is currently under close scrutiny in the USA: In February, the New York financial authority NYDFS already banned the US subsidiary from issuing the stablecoin Binance USD (BUSD). Binance is also suspected of being a key player in the Bitzlato scam, which is why the US Attorney’s Office is investigating the crypto exchange. The Ministry of Justice is also said to have opened an investigation against the crypto exchange for violations of anti-money laundering laws and possible tax offenses and is considering charges.
