A $1 billion lawsuit alleges that Binance, the largest cryptocurrency exchange in the world, its CEO Changpeng “CZ” Zhao, and some influencers endorsed unregistered securities.
The Moscowitz Law Office and Boies Schiller Flexner filed it. Binance is being sued for allegedly compensating influencers to spread the word about their unregistered securities trading.
Accusations Against Binance for Endorsing Unregistered Securities
A coalition of law firms has filed suit against the defendants, claiming they have harmed investors without them having to prove that the commercials had any impact on their decisions.
Millions of people may be entitled to compensation if the action is booming, and other Binance influencers may be named in subsequent filings.
The lawsuit also names three crypto influencers (NBA star Jimmy Butler, YouTubers Graham Stephan, and Ben Armstrong) and the centralized exchange Binance as defendants for allegedly advertising unregistered securities violating securities laws. Influencers marketing unregistered securities are to blame for any financial losses suffered by Voyager’s customers, according to the same legal firms that have previously filed suit against the company for the same reason.
Binance and the influencers may have to pay investors as much as $1 billion in damages if the claims against them are valid.
It was further reported that CZ and other high-ranking Binance employees hid the company’s ties to China. Binance has responded negatively to these claims, saying it does not conduct business in China and has no data or technology located in the country.
$1B Securities Lawsuit Aftermath
Binance has recently suffered a slew of blows, and this case is the most recent. The exchange is already being sued by the Commodities Futures Trading Commission (CFTC) of the United States for suspected trading violations, and Samuel Lim, the exchange’s former top compliance officer, is also getting charged by the CFTC for potentially trading in cryptocurrency-related derivatives with customers based in the US without authorization. The CFTC wants to impose fines and trading prohibitions of various lengths and severity.
Meanwhile, by processing $65 billion in daily deals and enjoying relationships with high-profile people like Cristiano Ronaldo, the Lazio football team in Italy, and TikTok sensation Khaby Lame, Binance has established itself as the backbone of the $1 trillion crypto market. Binance’s status and future in the cryptocurrency market are threatened by charges that it promoted unregistered securities and a lawsuit filed by the CFTC.
Final Thoughts
Binance, CZ, and the crypto influencers in the lawsuit have yet to comment on the case. The potential consequences of these lawsuits for the crypto market are significant, as they could result in increased scrutiny and regulation. Only time will tell how these legal battles will play out and their impact on the industry.