A $1 billion lawsuit has been filed against popular cryptocurrency exchange Binance, its CEO Changpeng “CZ” Zhao, and three influential figures in the crypto space, accusing them of promoting unregistered securities. The legal action, initiated by three American citizens, could potentially involve millions of people who may be eligible for damages.
Binance and Influencers Sued for Promoting Unregistered Securities
On March 31, Moscowitz Law Firm and Boies Schiller Flexner filed the massive lawsuit in the Southern District of Florida, claiming that Binance was engaged in trading unregistered securities and had paid influencers to unlawfully promote such services. The filing stated, “This is a classic example of a centralized exchange promoting the sale of an unregistered security.”
The lawsuit is based on a similar allegation made by the law firm against Voyager. That case claimed that influencers promoting “unregistered securities” should be held liable for customer losses.
The accused influencers include NBA Miami Heat star Jimmy Butler and YouTubers Graham Stephan and Ben Armstrong (BitBoy Crypto). The lawsuit demands that Binance and these influencers pay the affected investors $1 billion in damages.
Investigation and Liability Claims
The lawsuit also revealed that the investigation into Binance’s alleged unregistered security issues has been ongoing for over a year. According to the claim, promoters and exchanges facilitating trades of such assets “would be liable” for customer losses.
Interestingly, the suit asserts that investors are not required to prove the advertisements influenced them.
As millions of people could potentially be eligible for damages, the law firm has plans to include more Binance influencers in the lawsuit through future filings.
Allegations of Concealing Ties to China
In addition to the unregistered securities issue, a Financial Times report has accused CZ and other top Binance executives of hiding the cryptocurrency exchange’s connections to China. For example, in a November 2017 company message group, Zhao reportedly stated, “We no longer publish our office addresses… people in China can directly say that our office is not in China.”
Despite these allegations, Binance has maintained that the company “does not operate in China nor do we have any technology, including servers or data, based in China.”
Conclusion: The Implications of the $1B Lawsuit
This billion-dollar lawsuit against Binance, its CEO CZ, and the accused influencers highlights the regulatory scrutiny and legal challenges the cryptocurrency industry faces.
As the case unfolds, it could have far-reaching implications for other cryptocurrency exchanges and their promotional practices, potentially affecting millions of investors worldwide.