Key Takeaways :
- California Lawsuit Targets Binance Accusing Unfair Competition and Harm to FTX Exchange
- The lawsuit contends that Zhao’s proposal to acquire FTX lacked good faith and ultimately contributed to the downfall of FTX
In a recent development, a class-action lawsuit has been filed in California against cryptocurrency exchange Binance and its CEO, Changpeng Zhao. The lawsuit, initiated by California resident Nir Lahav, revolves around allegations of unfair competition and harm inflicted upon the cryptocurrency exchange FTX.
On October 2nd, an investor group led by Nir Lahav launched legal action against Binance and its CEO, Changpeng Zhao. The lawsuit alleges their participation in a conspiracy to disrupt and trigger the downfall of the now-defunct rival exchange, FTX.
The complaint, submitted in the U.S. District Court for Northern California, covers a range of alleged offenses, such as market manipulation, unfair competition, and breaches of Securities and Exchange Commission (SEC) regulations, all with the aim of establishing dominance in the cryptocurrency market.”
At the core of the legal action are tweets by Changpeng Zhao from November of the previous year, which coincided with Binance’s decision to divest its holdings of the FTX utility token, known as FTT. It is estimated that Binance held up to 5% of the total FTT tokens.
One of Zhao’s tweets had mentioned Binance’s intention to acquire FTX, but subsequently, the deal fell through. The lawsuit contends that this specific tweet, along with subsequent posts, played a significant role in triggering the downfall of FTX Entities.
According to the lawsuit, this collapse led to a substantial decline in the price of the FTX utility token, ultimately pushing FTX Entities into bankruptcy.
Additionally, the lawsuit highlights a statement in one of Zhao’s tweets, where he stated, ‘We are not against anyone… But we won’t support people who lobby against other industry players behind their backs.’
The plaintiffs interpret this statement as an indication that Binance was opposed to FTX CEO Sam Bankman-Fried’s ‘regulatory efforts.’
The lawsuit seeks monetary damages, court expenses, and disgorgement of gains acquired through seven counts. The suit suggests that there may be thousands of potential class members. It’s worth noting that both Binance and FTX are currently facing SEC actions. The criminal case against Sam Bankman-Fried is scheduled to commence on October 4th in New York.
