Changpeng Zhao, the CEO of Binance, along with Binance.US, are at the center of a class-action lawsuit. The legal action is related to their purported role in the collapse of FTX, a competing cryptocurrency exchange.
On Monday the lawsuit was initiated by California resident Nir Lahav, accusing Zhao and Binance.US of numerous federal and California law violations related to unfair competition. The lawsuit also alleges attempts to monopolize the cryptocurrency market.
The focus of the lawsuit is on a series of tweets from Zhao in early November, just before the unexpected collapse of FTX. The tweets, including one that announced Binance’s plan to liquidate its FTX utility token FTT holdings and another indicating an intention to acquire FTX, are believed to have had a significant impact on FTX’s future.
The lawsuit alleges that these actions, notably the tweets, played a substantial role in FTX’s quick downfall. The plaintiff also contends that Zhao’s statements were false and misleading, suggesting they were crafted to lower the price of FTT in the market.
The lawsuit is seeking monetary damages, court costs, and disgorgement of ill-gotten gains. The plaintiff also implies that the proposed class could include thousands of members. This lawsuit comes at a time when Binance is already under regulatory scrutiny from the U.S. Securities and Exchange Commission (SEC).
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