Binance CEO CZ faces Lawsuit alleging it harmed FTX before it collapsed

A class-action lawsuit targets Binance.US and CEO Changpeng Zhao for alleged unfair competition and market dominance, damaging FTX.
Binance CEO CZ

On October 2, California citizen Nir Laav filed a class-action complaint in the Northern California District Court against Binance.US and its CEO, Changpeng Zhao. By attempting to control the cryptocurrency market and harming their rival, FTX, Binance.US and its CEO are accused of breaking federal and California rules on unfair competition.

Zhao published articles in connection with the defendant’s choice to sell their FTX utility token FTT holdings on November 6 just before FTX collapsed. According to the plaintiffs’ estimates, almost 5% of all FTT tokens were owned by Binance.

Zhao reported the next day that Binance had signed a letter of intent to purchase FTX but had since withdrawn from the deal. In the case, it is claimed that “Zhao publicly disseminated this information [on the withdrawal of the acquisition offer] on Twitter and other social media platforms to hurt FTX entities, which ultimately led to a rushed and unprecedented collapse of FTX entities.”

In a post from November 6, Zhao stated that they intended to liquidate any outstanding FTT on their books as a result of the news. This assertion was untrue and inaccurate, though, as Binanae had already sold its FTT holdings and the post was “intended to cause the price of FTT in the market to decline.”

The plaintiffs took the last clause to mean that Binance opposed the “regulatory efforts” of FTX CEO Sam Bankman-Fried.

The lawsuit claims that “Zhao’s post caused the FTT price to decrease from US 23.1510 to US 3.1468. This severe decline forced FTX Entities into bankruptcy without allowing its executives or board of directors the time to turn things around and put safeguards in place to protect its customers and end-users.

In a case, seven counts of monetary damages, court expenses, and the restoration of fraudulently acquired wealth are demanded. The SEC is presently conducting action against both FTX and Binance, and the plaintiff in the case claims that the proposed class has thousands of members.

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