The cryptocurrency exchange platform, Binance, and prominent influencers such as Butler and BitBoy are facing a lawsuit for allegedly promoting and trading unregistered securities. The lawsuit, filed in the Southern District of Florida, claims that Binance paid influencers to endorse these investments that made influencers gone wild, which were not in compliance with the United States Securities and Exchange Commission. Those who purchased these investments are seeking compensation for their losses, which the lawsuit states fall under the Howey Test criteria for securities.
P.S. It is the Securities Act of 1933 that defines what qualifies as a security under US law.
Two of the test’s principles claim that if a user invests in an asset with the expectation of profit or makes a monetary investment, the asset’s stock, in this example, a token, is a security.
Two law firms, Moscowitz Law Firm and Boies Schiller Flexner, have been investigating tokens listed by Binance for over a year. The plaintiffs, represented by these firms, claim that the assets promoted by Binance and their influencers were unregistered securities under Floridian and Californian securities laws. Millions of investors were impacted, and the plaintiffs are seeking compensation as stated by the law. Adam Moscowitz, founding and managing partner of Moscowitz Law Firm, has now shed light on the matter. He explains:
Nevertheless, whether they win this action is contingent on the Florida court ruling that the tokens mentioned are securities. Even if they do, there will be little doubt that Binance and the influencers are to blame.
The Commodities Futures Trading Commission (CFTC) of the United States is also suing Binance and Changpeng Zhao for breaking the country’s trading rules.