Binance, CZ, and 3 Influencers Named in $1B Lawsuit
- Binance, Changpeng Zhao, and three influencers have been named in a $1 billion lawsuit alleging that they engaged in promotion of unregistered securities.
- The Moscowitz Law Firm and Boies Schiller Flexner filed the lawsuit in the Southern District of Florida and is seeking damages for three investors.
- The three influencers named in the Binance lawsuit are NBA Miami Heat star Jimmy Butler, and YouTubers Graham Stephan and Ben Armstrong (BitBoy Crypto).
- “We’ve been investigating these same unregistered security issues against Binance for over a year,” said the lawsuit.
Binance, the world’s largest crypto exchange by spot trading volume, has been the center of many lawsuits amid increasing regulatory pressure in the US. Interestingly, the exchange has also faced pressure to discontinue the minting of its stablecoin, BUSD. As per a report, the crypto exchange along with its CEO and co-founder, Changpeng Zhao, also known as CZ in the crypto space, along with three other influencers have been named in a $1 billion lawsuit.
According to a report from Fortune, the Moscowitz Law Firm and Boies Schiller Flexner filed the lawsuit against Binance, CZ, and three influencers in the Southern District of Florida, claiming that the crypto exchange is responsible for unlawful promotion of unregistered securities with the help of paid influencers.
“This is a classic example of a centralized exchange which is promoting the sale of an unregistered security,” said the filing while explaining the charges.
The three influencers named in the Binance lawsuit are NBA Miami Heat star Jimmy Butler, and YouTubers Graham Stephan and Ben Armstrong (BitBoy Crypto). In a similar lawsuit against Voyager Digital, the law firm claimed that influencers promoting “unregistered securities” are liable for customer losses. It seems that the same issue appears here as well.
It is crucial to note that the influencers and the exchange are asked to pay $1 billion as damages to investors. “We’ve been investigating these same unregistered security issues against Binance for over a year,” said the lawsuit, while adding that the partners of Binance and CZ are responsible for the losses of the customers and will have to pay accordingly.
The lawsuit also claims that the investors who have been affected by the endorsements of Binance, CZ, and the influencers are not required to prove to the court that they have been affected by these promotional campaigns. Over three inventors have been brought into the case, with the law firm stating that millions of investors might have been affected. The plan is to add more influencers to the case as well.
Binance CEO Explains Ties with China
Binance and its relationship with China were concealed for over seven years, claims a report from the Financial Times, and this news rocked the industry. “We no longer publish our office addresses … people in China can directly say that our office is not in China,” Zhao had reportedly said in a company message group in November 2017.
On the other hand, the exchange spoke to Cointelegraph, confirming that it “does not operate in China nor do we have any technology, including servers or data, based in China,” and adding:
“While we did have a customer service call center based in China to service global Mandarin speakers, those employees who wished to remain with the company were offered relocation assistance starting in 2021.”
It is also important to mention here that Binance, CZ, and the exchange’s Chief Compliance Officer, Samuel Lim, were sued by the United States Commodity Futures Trading Commission (CFTC) for violation of trading and derivatives rules.