Binance and its CEO, Changpeng Zhao, have been slapped with a class-action lawsuit, accusing them of unfair competition and violations of Security Exchange Commission (SEC) laws.
The complaint, led by plaintiff Nir Lahav, alleges Binance’s actions were aimed at monopolizing the crypto market by intentionally harming competing trading platforms operated by FTX entities.
Filed in the US Northern District Court of California, the lawsuit, pinpoints a series of actions that began with a social media post from Zhao on Nov. 6, last year.
At the time, Zhao announced the liquidation of Binance’s remaining holdings of FTX Token (FTT), a utility token used for reducing trading fees across the FTX exchange.
The move came a day after Binance had already allegedly sold approximately $530 million worth of FTT, triggering a 14% decline in the token’s price over 24 hours.
A spokesperson for Binance did not immediately respond to a request for comment.
Then, days after the liquidation, Zhao revealed via X, formerly Twitter, Binance had signed a non-binding letter of intent to fully acquire FTX.com, only to retract the statement shortly afterward.
According to the complaint, these actions led to the swift collapse and bankruptcy of FTX entities, resulting in financial losses extending into the billions for its customers. Lahav claims to have incurred losses as a result of transactions made on the FTX trading platforms prior to their collapse.
The CEO of FTX, Sam Bankman-Fried, had publicly advocated for regulatory efforts in the crypto sector, an approach the lawsuit suggests Binance found unfavorable.
Both Binance and FTX entities have been under SEC investigation for alleged violations of federal securities laws.
Bankman-Fried is staring down a lifelong sentence for fraud and money laundering charges, with his trial expected to commence on Tuesday. Zhao has publicly maintained his innocence, claiming regulators in the US are taking a heavy-handed approach in policing the budding sector.
Originally established in Shanghai in 2017, Binance subsequently relocated to Tokyo and later to Malta following a country-wide crackdown in China that made it untenable for the exchange to operate.
Although its holding company is situated in the Cayman Islands, Binance maintains that it lacks a formal headquarters and has refrained from disclosing the primary location of its Binance.com exchange.
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