Recently, the United States Commodity Futures Trading Commission (CFTC) sued Binance and its CEO, Changpeng Zhao (CZ), for alleged trade violations. Exactly five days after this incident, CZ and Binance faced a new lawsuit. The CFTC filed a new $1 billion lawsuit against the crypto exchange, CZ, and three crypto influencers for unregistered securities promotion.
$1 Billion Lawsuit Against Changpeng Zhao, Binance, and Influencers for Unregistered Securities Promotion
According to Fortune, a $1 billion complaint claiming Binance’s involvement in trading unregistered securities and paying influencers for the illegal marketing of such services was filed on March 31 in the Southern District of Florida by the Moscowitz Law Group and Boies Schiller Flexner. The filing’s explanation of the charges was as follows:
“This is a classic example of a centralized exchange, which is promoting the sale of an unregistered security.”
The law firm claimed that influencers peddling “unregistered securities” are accountable for customer losses in a prior action against Voyager. Similar accusations have forced Binance and the influencers, including Jimmy Butler of the NBA’s Miami Heat and YouTubers Graham Stephan and Ben Armstrong (BitBoy Crypto), to pay $1 billion to make up for the harm done to investors.
About Lawsuit
The lawsuit said, “We’ve been investigating these same unregistered security issues against Binance for over a year.” Promoters and exchanges that facilitate the trading of these assets would be accountable for any losses suffered by customers. The lawsuit also asserts that investors are not required to demonstrate how the commercials affected their decisions.
Although the action was initiated by three Americans, it claims that millions of people may be entitled to compensation. Additionally, the law firm intends to add more Binance influencers to the lawsuit in subsequent filings.
Relationship between CZ and China
According to a Financial Times story, CZ and other senior officials at Binance have been hiding the cryptocurrency exchange’s connections to China. Zhao allegedly stated the following in a business message group in November 2017:
“We no longer publish our office addresses … people in China can directly say that our office is not in China,”
The company “does not operate in China nor do we have any technology, including servers or data, based in China,” Binance added in a statement to Cointelegraph.
“While we did have a customer service call center based in China to service global Mandarin speakers, those employees who wished to remain with the company were offered relocation assistance starting in 2021.”
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