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A number of aggrieved investors have filed a lawsuit against Binance.US for misleading the public into buying the UST and LUNA coins.
A class-action lawsuit has been filed against the US arm of leading crypto exchange Binance for selling LUNA and TerraUSD (UST). The suit is from several investors who lost their money when both LUNA and UST crashed. According to the aggrieved investors, the prominent exchange sold unregistered LUNA and UST securities and misled people into purchasing them.
Filed in the Northern District of California on Monday, the suit also contained several other allegations. For instance, it alleges that Binance.US is not a registered broker-dealer in the States and therefore violates US securities laws. The lawsuit also specified that Binance deliberately promoted a bad project. It says that Binance not only supported the token but also listed the second iteration, LUNA 2.0, after the first one failed.
There were a few more allegations in the 72-page complaint, including accusing Binance of false advertising after the exchange claimed that UST was fiat-backed. The plaintiffs stated that the Changpeng Zhao-led platform only redacted those claims after the stablecoin collapsed. An excerpt read:
“Binance US’s failure to comply with the securities laws, and its false advertisements of UST, have led to disastrous consequences for Binance US’s customers.”
However, in response to this litany of allegations, Binance.US issued a statement through a company spokesperson which read:
“Binance.US is registered by FinCEN and adheres to all applicable regulations. These assertions are without merit and we will defend ourselves vigorously.”
The company spokesperson also maintained that Binance.US never listed LUNA like the lawsuit alleges, and delisted UST recently.
Binance.US Lawsuit Could Be First of Many Against US-Listed Exchanges Over LUNA Sale
The plaintiffs behind the lawsuit are agitating for a trial by jury for all issues deemed necessary for trial. This lawsuit could be the first of many against US-listed crypto exchanges which offered LUNA or UST to customers. Last month, Roche Freedman founder Kyle Roche reached out to aggrieved LUNA investors via Twitter. According to Roche, anyone who purchased the ill-fated tokens on any of the leading US exchanges was welcome to come forward.
If you purchased $LUNA or $UST on either @coinbase @krakenfx @binance or @Gemini, please reach out to [email protected] . My firm is coordinating an effort to help those who lost funds from the recent collapse of #terra and #luna.
— Kyle Roche (@KyleWRoche) May 13, 2022
Roche’s law firm is one of the collaborating firms on the current class-action lawsuit, in conjunction with Dontzin Nagy & Fleissig. If the lawsuit proves successful, it could set the tone for how other authorities, especially governments, hold crypto exchanges accountable. In addition, the lawsuit’s success could also help establish clear parameters around the legal status of decentralized finance (DeFi) organizations and sector.
The latest lawsuit also represents mounting legal woes for Binance in the US. The exchange must also grapple with the Securities and Exchange Commission’s (SEC) current investigation of the BNB ICO in 2017.