Binance, the largest cryptocurrency exchange by daily trading volume, and its CEO, Changpeng Zhao (CZ), seem to be facing a lawsuit. A recent class action lawsuit alleges that Binance paid influencers to advertise tokens and traded securities unregisteredly. Here are the details…
A new lawsuit shock to Binance exchange
On March 31, 2023, two US law firms, the Moskowitz Law Firm and Bois Schiller Flexner, filed a class action lawsuit against Binance, the world’s largest cryptocurrency exchange. The lawsuit alleges that Binance traded unregistered securities and paid influencers to illegally promote their tokens on social media. In the complaint, Binance CEO Changpeng Zhao (CZ) along with NBA player Jimmy Butler, crypto-related content creators Ben Armstrong and Graham Stephens are cited as defendants. Moskowitz Law Firm said it plans to add other influencers to the class action in the future.
According to the lawsuit, the exchange signed “brand ambassador” contracts with celebrities like Butler to help promote Binance and attract new customers. One influencer argued that Binance wouldn’t be able to grow that much without promotions. The lawsuit was filed by three plaintiffs who claimed they lost money due to cryptocurrencies promoted by Binance. However, the number of people affected by Binance’s actions could be “in the millions”, according to the lawsuit. One of the defendants, Ben Armstrong, commented on the lawsuit, saying that the Moskowitz Law Firm was suing him for promoting unregistered securities in the Binance affiliate program.
The status of cryptocurrencies as securities came to the fore again
Moskowitz Law Firm cites a complaint filed against Binance by the US Commodity Futures Trading Commission (CFTC) as evidence. The CFTC considers some cryptocurrencies to be commodities, but in this case they are considered securities, indicating a difference of opinion. This lawsuit against Binance and its related influencers marks an important step in the regulatory environment of the cryptocurrency industry. Accusations of trading unregistered securities and paying influencers to promote tokens on social media are serious allegations that can have far-reaching consequences for Binance and its reputation.
It is not yet clear how this lawsuit will turn out and what impact it will have on Binance and the wider cryptocurrency industry. However, it is clear that regulators and law firms are paying more and more attention to the industry, and businesses need to take compliance seriously to avoid similar legal action in the future. However cryptocoin.com As we have also reported, when there is a difference of opinion even between the US Securities and Exchange Commission (SEC) and the CFTC, it seems very difficult to predict how companies should behave in the US.
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