Binance France and Binance Holdings Limited are being sued over alleged misleading commercial practices and fraudulent concealment.
This end of the year is undoubtedly one of the most incredible periods for Binance. After the scandal related to its proof of reserves, another case arrives that plunges the crypto platform into an unprecedented crisis.
In fact, a group of fifteen French investors has decided to sue Binance France and the parent company Binance Holdings Limited. The charges against the exchange are the alleged use of deceptive practices and fraudulent concealment.
Fifteen French Investors File Complaint Against Binance
A group of fifteen French investors decided to sue Binance France and its parent company Binance Holdings Limited in court. The plaintiffs accuse the exchange of practices that are less than suspicious. The complaint was made public on December 14. In essence, the exchange would have violated the rules in force on French soil.
Advertising and distribution of crypto services without prior registration by government authorities is a violation. This is exactly what Binance allegedly did, according to the plaintiffs.
Since May 2022, Binance has had the approval of the AMF, but the facts denounced are after this date. With its French license, the platform could enable crypto asset custody and cryptocurrency trading.
In support of their complaint, the plaintiffs use screenshots to justify Binance’s activities on the internet, prior to obtaining the license.
In fact, the plaintiffs claim approximately 2.4 million euros from the platform. They would have lost this sum after the collapse of TerraUSD (UST), a token that Binance announced was backed by the dollar.
Binance’s Reaction
The exchange refuted the charges in a blog post answering a few questions. The crypto platform denies any promotional activity before obtaining the license.
Since the accusations are also related to the Telegram group, the platform believes that the forum concerns all users in the world and not only French ones. In addition, Binance specifies that entry to Telegram groups is voluntary and that each user can create one if they wish.
Binance also responded to questions about the publicity of the Terra stablecoin in the country. The company noted that its communication presents staking with Binance as “safe, and not the underlying tokens.” The exchange also noted that it always includes market risk warnings for crypto products, and has further strengthened its descriptions. Meanwhile, it is difficult to say how far this case will go, but the next few days will be decisive.
It is worth remembering a series of dramatic events in May 2022 that led to an unprecedented drop in the price of the LUNA token, and its associated stablecoin, TerraUSD (UST), which was designed to maintain algorithmic parity with the US dollar, but instead plunged below $0.30.
By Audy Castaneda
