Binance announcement is gloomy this time as Binance and its CEO, Changpeng Zhao, have been sued for unfair competition and violating SEC laws by a class-action lawsuit.
As stated in the lawsuit, filed in the US Northern District Court of California, led by plaintiff Nir Lahav, Binance intentionally harmed rival trading platforms operated by FTX entities in order to monopolise the crypto market.
The case identifies a series of actions beginning with Zhao’s social media post on the 6th of November, 2022.
In that post, Zhao said that Binance was liquidating the remainder of its FTX Token (FTT) holdings, the exchange’s utility token. The move follows Binance’s alleged $530 million sale of FTT a day earlier, which caused the token’s price to decline 14%.
Several days after the liquidation, Zhao stated on X (previously Twitter) that Binance had signed a non-binding agreement to buy FTX.com. However, his statement was later retracted.
A complaint alleges that these actions caused FTX subsidiaries to collapse and go bankrupt, causing customers to suffer billions of dollars in losses. According to his lawsuit, Lahav asserts that he suffered losses following transactions made on the FTX platform before the exchange collapsed.
As the lawsuit claims, Binance announcement was harsh as it found FTX’s CEO Sam Bankman-Fried’s support of regulatory initiatives harmful to the cryptocurrency industry.
The SEC is currently investigating both Binance and FTX for suspected violations of US securities laws.
Bankman-Fried faces life imprisonment on charges of fraud and money laundering and is due to go on trial on Tuesday. As the US regulators impose heavy-handed restrictions on the growing industry, Zhao publicly maintains his innocence.
Binance, the largest cryptocurrency trading platform, was founded in Shanghai in 2017. The company relocated to Tokyo and later to Malta in response to a crackdown that made its operations untenable in China.
While Binance’s holding company is located in the Cayman Islands, it does not have a formal headquarters, and it does not disclose where its Binance.com exchange is based.