CZ Binance, Influencers in Hot Water with $1B Lawsuit

A new $1 billion lawsuit has been filed against cryptocurrency exchange C.Z., five days after Binance and its CEO Changpeng “C.Z.” Zhao were sued by the U.S. Commodity Futures Trading Commission (CFTC) for alleged trading violation, three cryptocurrency influencers filed securities—promotion of unregistered cryptocurrencies. 

Key Takeaways:

• The US filed a $1B lawsuit against Binance, CZ, and crypto influencers.
• The lawsuit alleges violations of federal and state securities laws, breach of contract, and fiduciary duty.
• The lawsuit adds to the regulatory scrutiny Binance faces in different countries.
• The case highlights the need for due diligence and an understanding of the crypto regulatory landscape.
• US investors should only invest in SEC-registered assets.

On March 31, law firm Moscowitz, Boies Schiller Flexner filed a $1 billion lawsuit in the Southern District of Florida, accusing Binance of engaging in unregistered securities trading, and illegally promoting such services, according to Fortune. While accusations were explained or the file read:  

“This is a classic example of centralized exchange facilitating or sale of unregistered securities.” 

In a previous lawsuit against Voyager, the law firm argued that influencers promoting “unregistered securities” are liable for losing their customers. Heat star Jimmy Butler or YouTubers Graham Stefan, and Ben Armstrong (BitBoy Crypto) are being asked to pay investors $1 billion for damages.  

“We have been investigating the same unregistered security issue, against Binance for over a year,”

the lawsuit added. Promoters and exchanges that facilitate the trading of such assets are “held liable” for their customers’ losses. Furthermore, the lawsuit argues that investors do not have to prove influence from advertising. 

Three Americans have filed a lawsuit, claiming that “millions” of people are entitled to damages. We plan to have influencers participate in cases. 

Meanwhile, according to the Financial Times, C.Z. and other Binance executives allege they covered up the exchange’s ties to China. 

In November 2017, Zhao told a company newsgroup.

“We no longer publish our office address. People in China can or directly tell us that our office is not in China.” 

However, Binance confirmed that it “does not operate in China, does not have any technology, including servers or a data, in China,” adding:  

According to Binance, 8,000 full-time employees live in Europe, America, the Middle East, Africa, or Asia Pacific. 

A class-action lawsuit seeking damages worth $1 billion has been filed against cryptocurrency exchange CZ, its U.S. counterpart Binance US, and several influential individuals for promoting unregistered securities to US-based investors.

The lawsuit was filed in the Southern District of New York and cites violations of federal and state securities laws, breach of contract, and breach of fiduciary duty.

The recent lawsuit is another blow to Binance, which has recently faced regulatory scrutiny from several countries. In June, the U.K. Financial Conduct Authority (FCA) banned Binance from operating in the U.K., stating that it was not authorized to conduct regulated activities there.

The lawsuit highlights the risks involved in investing in the cryptocurrency market and the importance of conducting due diligence and understanding the regulatory landscape.

US-based investors should be cautious when investing in cryptocurrencies and only invest in assets registered with the SEC and comply with U.S. securities laws.

CZ, Binance, and several influential individuals have been sued for promoting unregistered securities to US-based investors.

The lawsuit seeks damages worth $1 billion and alleges violations of federal and state securities laws, breach of contract, and breach of fiduciary duty. This lawsuit is another setback for Binance, which has recently faced regulatory scrutiny from several countries.