Binance CEO Changpeng Zhao and Binance.US are currently being sued in a class-action lawsuit filed by California resident Nir Lahav. The lawsuit accuses them of playing a role in the downfall of rival exchange FTX and violating federal and California laws related to unfair competition and monopolizing the cryptocurrency market.
The lawsuit specifically references a series of tweets made by Changpeng Zhao in early November, just before FTX’s collapse. These tweets are alleged to have significantly affected FTX’s fate. On November 6, Zhao announced that Binance would be liquidating its holdings in the FTX utility token FTT, which caused shockwaves in the crypto community. The plaintiffs estimate that Binance held up to 5% of all FTT tokens. The following day, Zhao made a tweet stating Binance’s intention to acquire FTX, only to retract the commitment the next day. The lawsuit claims that this announcement and subsequent withdrawal were intended to harm FTX.
One of the key points of contention in the lawsuit is Zhao’s November 6 tweet, where he stated that Binance would be liquidating its remaining FTT holdings. The plaintiffs argue that this statement was false and misleading since Binance had already divested its FTT holdings. They believe that this tweet was meant to drive down the price of FTT in the market.
The lawsuit also points to a statement in Zhao’s tweet where he mentioned not supporting people who lobby against other industry players behind their backs. The plaintiffs interpret this as Binance opposing FTX CEO Sam Bankman-Fried’s regulatory efforts.
The lawsuit seeks monetary damages, court costs, and the disgorgement of ill-gotten gains based on seven counts, with potentially thousands of members in the proposed class. Binance is also under scrutiny by the U.S. Securities and Exchange Commission (SEC), which could impact the future of CZ’s crypto empire.