The world’s largest crypto exchange, Binance, is facing a class action lawsuit for alleged market manipulation and dishonest practices.
The largest cryptocurrency exchange continues to face problems, this time Binance faces a class action lawsuit. The reasons, according to the plaintiffs, allude to alleged market manipulation. Both Binance and its CEO, Changpeng Zhao, received lawsuits for unfair competition and alleged violations of laws from the United States Securities and Exchange Commission (SEC).
The lawsuit, led by Nir Lahav, explains that Binance behaved like a monopoly and sought to harm its competitors. This time, the plaintiff claims that the company’s strategies monopolized and harmed the companies operated by FTX.
The conflict between Binance and FTX dates back to last year, when Binance publicly announced its withdrawal from a deal with FTX. Binance had invested in FTX tokens (FTT) and owned approximately 5% of the coin’s total supply.
For Alleged Market Manipulation, Binance Faces Class Action Lawsuit
After the fall of FTX, Binance has been pointed out as one of the causes. Although on repeated occasions, the company’s CEO assured that his steps were solely to protect its assets. The reason dates back to November last year, when a CZ post announced the sale of FTT, the FTX token.
The initial sale amount, approximately $530 million, caused the FTT price to drop by 14% in less than 24 hours. This measure and Binance’s declaration and intention to liquidate its holdings, created a domino effect that, for many, was the reason for the fall of FTX.
The lawsuit also revealed that Binance had sold a large amount of FTT the day before CZ made the public announcement. This fact has led to allegations of market manipulation by CZ and therefore makes it liable for the losses suffered by the plaintiff.
After having been one of the most important cryptocurrency exchanges, losing one of its most significant allies and holders destabilized them. The lawsuit filed in a Court of the Northern District of California, USA, indicates that these actions began on November 9 and caused the bankruptcy of the exchange.
The new lawsuit adds to the legal issues Binance already faces. The consequences of these legal actions are being closely watched by the crypto community as they raise questions about regulation and transparency in the cryptocurrency market. The resolution of this case could have a significant impact on the future of Binance and the way the cryptocurrency ecosystem develops as a whole.
Ongoing Investigation of the Exchange by the SEC
Binance is currently under scrutiny by the SEC for alleged violations of federal securities laws. This has even led the exchange to reconsider its position in the United States market, which is why it has continued to expand in other areas.
Despite the accusations and persecution, Zhao maintains his position regarding the innocence of the exchange and his person. The situation does not seem to affect the company’s CEO, who often jokes about the situation on his X account.
The authorities often maintain that Binance collaborates with the Chinese government and even has ties to it. However, after being founded in 2017 in Shanghai, the exchange moved its headquarters to different locations until it was located in the Cayman Islands. Currently, the main headquarters of the exchange is unknown and CZ has dodged the question, claiming that it lacks a formal headquarters.
By Audy Castaneda
