Five days after Binance and its CEO Changpeng Zhao "CZ" Zhao were indicted by the U.S. Commodity Futures Trading Commission (CFTC) for alleged trading violations, a lawsuit has been filed against the cryptocurrency exchange, CZ and three cryptocurrency influencers. A new $1 billion lawsuit seeking their promotion of unregistered cryptocurrency securities.
On March 31, the Moscowitz law firm and Boies Schiller Flexner filed a $1 billion lawsuit in the Southern District of Florida, alleging that Binance was involved in trading unregistered securities and paying influencers to illegally promote it, Fortune reported. class service. Explaining the allegations, the document reads: “This is a prime example of a centralized exchange that is facilitating the sale of unregistered securities.”
In a previous lawsuit against Voyager, the law firm claimed that influencers promoting "unregistered securities" were liable for client losses. Based on similar claims, Binance and influencers NBA Miami Heat star Jimmy Butler, and YouTube users Graham Stephan and Ben Armstrong (BitBoy Crypto) were challenged to pay $1 billion for losses to investors.
"We have been investigating these same unregistered security issues against Binance for over a year," the lawsuit added, adding that promoters and exchanges facilitating trades in such assets "will bear the burden" of customer losses. In addition, investors are under no obligation to prove that they were influenced by the advertisement, the suit says. While three U.S. citizens filed the lawsuit, the suit says "millions" of people could be eligible for damages. The law firm also plans to bring in more Binance influencers to the lawsuit in future filings.
Meanwhile, CZ and other Binance executives have been hiding the cryptocurrency exchange’s ties to China, according to the Financial Times.
"We no longer publish our office address...Chinese people can just say our office is not in China," Zhao reportedly said in a company newsgroup in November 2017. However, Binance confirmed in an interview with Cointelegraph that the company “does not operate in China, nor do we have any technology, including servers or data located in China,” adding:
"While we do have a customer service call center in China to serve Mandarin speakers globally, beginning in 2021, those employees who wish to remain with the company will receive relocation assistance." According to Binance, its 8,000 full-time employees are spread across Europe, the Americas, the Middle East, Africa, and Asia Pacific.
