Latest Posts

Terra investors file a class action lawsuit against Binance.US

- Advertisement -


👋 Would you like to work with us? Cryptooshala is recruiting for several vacancies!

A group of investors have filed a class action lawsuit against Binance.US and its CEO for alleged non-compliance with federal and state securities laws.

- Advertisement -

According to registrationBinance.US falsely advertised UST, an algorithmic stablecoin pegged to LUNA Terra, as a safe, stable and fiat-backed asset, with “disastrous consequences” for its clients.

US division of Binance faces major class action lawsuit

- Advertisement -

Binance.US has been accused of misleading investors and violating several U.S. federal and securities laws in a class action lawsuit.

- Advertisement -

The lawsuit, filed on June 13, alleges that the exchange allowed US residents to buy and sell TerraUSD (UST) without approval from the US Securities and Exchange Commission (SEC).

Plaintiffs accused Binance.US of not disclosing that UST is in fact a security and that it allows you to buy and sell this security without a formal registration statement. In addition, Binance refused to register with the SEC as a securities exchange or broker-dealer.

According to the requests:

“Binance.US’s non-compliance with securities laws and false advertising by UST has led to disastrous consequences for [its] clients,”

While the exchange delisted both UST and LUNA following the collapse of Terra in May, the plaintiffs allege that it still has not stopped selling securities issued by Terraform Labs, Terra’s parent company. Instead, at the end of May, parent company Binance.US began selling Luna 2.0, a token, a hard fork of the original Terra (LUNA), which is also centrally controlled by Terraform Labs.

In addition to not disclosing that it sells securities, Binance.US has also been accused of misleading investors with false advertising. Plaintiffs allege that UST was advertised and marketed to investors as a “safe” and “stable” asset that could generate significant returns.

The exchange also falsely advertised UST as “fiat-backed”, without informing its clients that the stablecoin algorithmically received its peg to the LUNA price.

“After the UST collapse, Binance US removed its ads promoting UST as ‘secure’ and ‘fiat-backed’, effectively admitting that UST is none of those things.”

The lawsuit against Binance.US will be the first of many

The class action lawsuit was filed by Roche Freedman, a New York-based law firm known for its controversial case against Craig Wright.

In an interview with CryptooshalaFatManTerra said he helped the office assemble a class of about 2,000 people who suffered losses from the collapse of UST. He will continue to reach out to more investors who have suffered losses and connect them to the legal offices working on the case, but will not play any specific role in the lawsuits.

While Roche Freedman could not be contacted for comment, FatManTerra said the class action lawsuit against Binance.US would be the first of many that UST investors intend to file.

In a lawsuit against Binance.US, the plaintiffs are demanding damages from the exchange for damages from the ESN. FatManTerra said another class action lawsuit in the works will also seek damages from Terraform Labs and Jump Crypto, one of Terra’s most notorious backers.

It’s unclear how the lawsuit will affect Brian Schroeder, the CEO of Binance.US, as he was named as a defendant in the lawsuit along with the exchange.

The lawsuit will have long-term implications for the crypto industry. If successful, the lawsuit against Binance.US could set a precedent that will radically change the regulatory environment in the US.

The SEC has long sought to tighten its grip on the crypto market and has been warning investors about the risks and dangers associated with DeFi products. Having an exchange, the size of Binance.US losing a securities law violation case could cause a ripple effect that could lead to a global overhaul of cryptocurrency regulations.

FatManTerra said to Cryptooshala:

“People have been drawn into the siren calls for ‘safe, stable returns’ but no attempt has been made to help them actually understand what they are buying. This is morally dishonest and, in my opinion, should be illegal.”

“In free markets, you can buy and sell whatever you want (fairly), but the moment you try to sell someone a copper bar demanding its gold, you will be fined. It surprises me that the same principles do not apply to centralized exchanges, which must operate in accordance with the law. Many exchanges are morally bankrupt and will lie at every turn – we need to hold them accountable and show them that when you prey on the innocent with misleading marketing, there are consequences.”





Credit : cryptoslate.com

- Advertisement -

Latest Posts

Don't Miss