Binance CEO Faces Class-Action Lawsuit Alleging Role in FTX’s Downfall

In a legal move that has sent shockwaves through the cryptocurrency world, Binance CEO Changpeng Zhao and Binance.US are now grappling with a class-action lawsuit. Filed by California resident Nir Lahav, the suit contends that the exchange giant and its CEO played a significant role in the dramatic collapse of rival exchange FTX. The complaint further alleges a range of violations of both federal and California law, including charges related to unfair competition and attempts to monopolize the cryptocurrency market.

The crux of the lawsuit centers on a series of tweets issued by Changpeng Zhao in early November, just prior to FTX’s stunning downfall. These tweets are asserted to have wielded a substantial influence over FTX’s fate. On November 6, Zhao dropped a bombshell, announcing Binance’s decision to liquidate its holdings in FTX’s utility token, FTT. The reverberations from this revelation rippled through the crypto community.

Plaintiffs in the lawsuit estimate that Binance held a substantial portion, potentially up to 5%, of all FTT tokens. The following day, Zhao added fuel to the fire with another tweet, indicating Binance’s intent to acquire FTX. However, this commitment was promptly retracted a mere day later. The lawsuit argues that this announcement and subsequent withdrawal were made with the express purpose of harming FTX.

At the heart of the legal battle lies Zhao’s tweet from November 6, where he stated, “Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books.” The lawsuit asserts that this statement was misleading, as Binance had already divested its FTT holdings. The plaintiffs contend that this tweet was strategically crafted to drive down the price of FTT in the market.

The lawsuit marks a significant moment in the cryptocurrency landscape, as it shines a light on the complexities and potential pitfalls of competition within this rapidly evolving sector. With the outcome uncertain, industry observers will be closely watching as this legal battle unfolds, poised to potentially reshape the dynamics of the cryptocurrency market.

Source: cryptonews

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