- Binance.US and its CEO have been accused of alleged market monopoly and other conducts to harm FTX.
- The lawsuit alleges that Zhao knowingly deceived FTX and its customers with hopes of acquisition to gain control of the crypto market.
Global crypto exchange Binance.US and its CEO, Changpeng Zhao, have been slammed with a class action lawsuit for alleged market monopolization to harm its competitor, the now-bankrupt FTX.
The lawsuit was filed by a California resident, Nir Lahav, on behalf of “himself and all others similarly situated,” who lost crypto assets due to FTX’s collapse. Nir Lahav cited injury caused by unfair competition and several violations of federal, California, and SEC laws.
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The plaintiff alleged that Binance.US and Chengpeng had knowingly attempted to harm FTX, referring to posts made by the CEO in November 2022, shortly before it became public that FTX was in deep waters. The posts coincided with the defendants’ Nov. 6 liquidation of their FTX utility token, FTT (FTT). The plaintiffs believed Binance owned 5% of FTT tokens.
On November 6, 2022, Binance CEO wrote on Twitter that the crypto exchange was liquidating all FTT holdings due to “recent revelations” that had come to light. However, the file highlights that the exchange had already sold and moved 23 million FTT before the announcement, causing FTT’s price to drop by 14%.
The following day, Binance reported that it had signed a letter of intent to acquire FTX to protect users but pulled back a day later, expressing regret.
“Zhao publicly disseminated this information on Twitter and other social media platforms to hurt FTX Entities, that ultimately led to a rushed and unprecedented collapse of FTX Entities. FTX…were unable to avoid this collapse in the market before FTX Entities’ bankruptcy filings. Zhao showed no qualms about publicly tweeting to hurt FTX Entities,” the suit read.
The plaintiff, in his claim, alleged that Zhao’s Nov 6 tweet was false and misleading since Binance had already sold its FTT holdings, and the post was “intended to cause the price of FTT in the market to decline.”
He also alleged that Zhao’s post, “We are not against anyone, but we won’t support people who lobby against other industry players behind their backs,” was a subtle dig at FTX since both players had clashed over Sam Bankman-Fried’s regulatory activities.
The plaintiff, Nir Lahav, alleged that Zhao and Binance had a strong financial incentive to incite the downfall of FTX to take the lead on lobbying effects for crypto in the US.
He added that the CEO never intended to save FTX customers, playing the “classic bait and switch” to trigger market volatility and gain more influence in the regulatory world.
The lawsuit demanded monetary damages, court costs, and disgorgement of ill-gotten gains based on seven counts, including negligent and intentional misrepresentation and unfair competition. Both Binance and FTX are under SEC actions, and the case against FTX’s former CEO, Sam Bankman-Fried, will commence on October 4 in New York.