Binance Sued for Causing FTX Implosion: Details
- A lawsuit has been filed against Binance and CEO Changpeng Zhao, alleging multiple violations.
- Nir Lahav, a Californian, claims that CZ and his exchange misled investors after dumping its FTT bag.
- The lawsuit also claims that the exchange tried to monopolize the digital asset sector by causing harm to FTX.
- The plaintiffs have estimated that Binance held close to 5% of all FTT tokens in circulation.
Binance, the largest crypto exchange in the world by trading volume, has been sued recently by a resident of California who claims that the exchange was responsible for the implosion of FTX, a former multi-billion dollar crypto exchange. The lawsuit also named the CEO of the leading exchange, Chanpeng Zhao, also known as CZ in the industry.
The class-action lawsuit was filed against Binance and its CEO on October 2 in the District Court of Northern California and made several headlines as well. The lawsuit alleges multiple violations of federal and California law on unfair competition for attempting to monopolize the digital asset sector by causing harm to its rival FTX, which was run by Sam Bankman-Fried, also known as SBF in the crypto space, at that time.
Nir Lahav, a person identified only as a California resident, has been named as the entity behind this lawsuit. Lahav claims that a series of posts on social media platform X (formerly known as Twitter) damaged the reputation that FTX had and led to its collapse. The posts were made in conjunction with the defendants decision to liquidate their holdings in the FTT token on November 6. The plaintiffs have estimated that Binance held close to 5% of all FTT tokens in circulation.
After the series of posts, Binance CEO signed a letter of intent to acquire FTX but backed out of the deal a day later, the lawsuit noted while adding:
“Zhao publicly disseminated this information [on the withdrawal of the acquisition offer] on twitter and other social media platforms to hurt FTX Entities that ultimately lead to a rushed and unprecedented collapse of FTX Entities.”
The lawsuit also claims that CZ’s claims that his firm will sell FTT holdings due to some kind of revelation were false and misleading since Binance had already sold its FTT bag.
As reported earlier by Bitnation, FTX founder Bankman-Fried sought to pay $4 billion to prevent Donald Trump from running as a presidential candidate for the 2024 United States elections.