CZ and Binance Face Lawsuit Regarding FTX’s Decline

Binance CEO CZ SEC

A class-action lawsuit has been initiated by a resident of California named Nir Lahav against Binance and its CEO, CZ. The lawsuit alleges that Binance and CZ violated legal statutes by allegedly engaging in actions that harmed their competitor, FTX, in what is believed to be an attempt to establish a monopoly within the cryptocurrency market.

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Changpeng Zhao (CZ), who serves as the CEO of the world’s largest cryptocurrency exchange, Binance, and its U.S. counterpart, Binance.US, is currently embroiled in a class-action lawsuit initiated by Nir Lahav, a resident of California. Filed on October 2 in the District Court of Northern California, the lawsuit encompasses a range of allegations, including violations of federal and California laws related to unfair competition and an alleged endeavor to establish a monopoly within the cryptocurrency market.

The origins of this lawsuit can be traced back to a series of tweets issued by Changpeng Zhao in early November, shortly before the significant decline of the competing exchange, FTX. Additionally, the plaintiff contends that these tweets played a substantial role in determining FTX’s fate.

On November 6, Changpeng Zhao disclosed Binance’s intention to sell off its holdings in the FTX utility token, FTT, which sent shockwaves throughout the cryptocurrency community. Binance’s ownership of up to 5% of all FTT tokens amounted to an estimated value of approximately $2.1 billion USD equivalent in cash.

The following day, CZ posted another tweet, this time announcing Binance’s intention to acquire FTX, only to retract that commitment within a 24-hour timeframe. Nevertheless, the lawsuit contends that Binance and Zhao made this announcement and subsequent withdrawal deliberately with the aim of causing harm to FTX and its vested interests.

A lawsuit statement against Binance.US and CZ. (Source: CourtListener)

The central argument presented in the lawsuit revolves around the assertion that Changpeng Zhao’s actions, notably his posts on Twitter, significantly contributed to what is characterized as the “abrupt and unparalleled downfall of FTX entities.”

Moreover, the lawsuit contends that these actions were purposefully deceptive and aimed at precipitating a drop in the market price of FTT. This cryptocurrency experienced a sharp decline, plummeting from a range of $24.6 to $2.2 as a result.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

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