Lawsuit Filed Against Binance US over the Terra UST Collapse and Selling Unregistered Securities
A
class-action lawsuit against Binance US has been filed in California alleging the exchange misled investors and sold unregistered securities to
roughly 2,000 plaintiffs. The case was filed by the law firm Roche Freedman
LLP, a reputed company known for crypto lawsuits during the last few years. The lawsuit accuses Binance US of marketing TerraUSD (UST)
as a firmly pegged stablecoin
tied to the value of the U.S. dollar.
Lawsuit Accuses Binance US of Misleading Investors
The U.S.-based Binance trading platform, Binance US was served with a lawsuit that accuses the company of
selling unregistered securities and misleading investors on Monday. The accusations derive from last month’s Terra UST de-pegging
incident and the entire Terra Classic blockchain ecosystem getting eliminated.
The
class-action lawsuit was filed in California and the law firm behind the case
is Roche Freedman LLP, the same company that was involved in the Kleiman
vs. Wright case and other well-known crypto lawsuits.
The lawsuit
accuses Binance US of misleading customers by not
complying with U.S. Federal and State Securities laws when it listed TerraUSD (UST). The lawsuit claims
UST was sold as a "safe" asset and as "an early supporter of
Terraform Labs, Binance US is intimately familiar with UST and LUNA."
The lawsuit
shows an advertisement showing Binance offering locked staking on UST, and it
says "high yield, safe & happy earn." Another advertisement shown
in the lawsuit calls UST
"fiat-backed." The class-action lawsuit says that Binance US failed to disclose that "UST is, in
fact, a security" and that Binance "refused to register" with
the U.S. Securities and Exchange Commission (SEC) as a "securities
exchange or as a broker-dealer."
In May 2022,
"Binance US’s failure to comply with the securities laws and its false
advertisements of UST have led to disastrous consequences for Binance US’s
customers." In the span of just a few days, UST lost essentially all its
value — a loss of approximately $18 billion," the lawsuit alleges.
According to the lawsuit, after the UST collapsed, Binance removed the false
advertisements but notes that Binance has not stopped selling Terra-based
securities.
The Lawsuit States
Binance US’s parent company blithely added
insult to injury when, on May 31, 2022, it began selling Luna 2.0—a new token
which, just like LUNA, is centrally controlled by Terraform Labs.
Whistleblower Fatman Says the Binance Lawsuit Is Just the Beginning as
‘Another Class-Action Lawsuit Aimed at Helping Terra Investors Is Coming.’
The
well-known whistleblower Fatman helped the suit move forward by
gathering 2,000 Terra investors. Fatman has disclosed that another class-action
suit aimed at helping grieving Terra investors will follow the case filed by
Roche Freedman on Monday. Fatman tweeted about the current class action against
Binance US on Monday as well.
"We begin today," Fatman tweeted. "Partnered with one of the law firms I’m working with, Roche Freedman, our group of UST victims are bringing a class action against Binance US for tortious deceit [and] more." I prefer a world where when crypto companies lie [and] prey on the weak, there are consequences. "
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