The lawsuit blames crypto exchange Binance and its affiliates for illegally promoting unregistered securities and also engaging in the activities of BNB burn.
Crypto exchange Binance and its CEO Changpeng Zhao (CZ) is facing another set of difficulties in a high-profile legal challenge. Just a few days after the US Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance, the Moskowitz Law Firm, and Boies Schiller Flexner have also fined another class action lawsuit targeting the Binance chief along with other influencers such as NBA star Jimmy Butler, for promoting unregistered securities.
These two law firms have filed a $1 billion lawsuit in the Southern District of Florida. The lawsuit claims Binance’s involvement in the trading of unregistered securities as well as paying influencers for unlawful promotions. “This is a classic example of a centralized exchange, which is promoting the sale of an unregistered security,” the lawsuit notes.
Adam Moskowitz, the managing partner of Moskowitz Law Firm, discussed the details with the Fortune publication. the two law firms – Moskowitz Law Firm and Boies Schiller Flexner – had previously teamed up to bring a class action lawsuit against Voyager Digital. Back then, the law firm had stated that influencers promoting “unregistered securities” will be liable for customers’ losses.
On similar claims, Binance and influencers including NBA Miami Heat star Jimmy Butler, and YouTubers like Ben Armstrong (BitBoy Crypto) and Graham Stephen face the charges of paying $1 billion in damages caused to customers. Moskowitz said: “We’ve been investigating these same unregistered security issues against Binance for over a year”.
Millions of People Eligible for Damages
As per the lawsuit filed by three American investors, “millions” of people could be eligible for the damages. the law firms are planning to rope in more Binance influencers to the suit in future filings. The plaintiffs are two Florida residents and a person from California.
As Moskowitz told Fortune:
“The statute clearly states that if an influencer is promoting an unregistered security, and has a financial interest in doing so, the influencer may be liable to everyone who bought the assets. The exchange that facilitates the trades would be liable as well.”
Interestingly, the complaint notes both – Binance’s native token BNB as well as its Affiliate program. The lawsuit makes the case that the Binance chief CZ burns or eliminates the BNB. Thus, it reduces supply in an effort to boost its prizes, an action that brands BNB as a security.
The lawsuit also gives details on Binance affiliates received the rebates on the trades for investors they recruit and “click through their link” to buy and sell coins on the Binance platform. Thus, it also names Stephen and Armstrong for illegally promoting unregistered securities.
“If we win on the unregistered securities issue, there will be no question that Binance and the influencers are liable,” Moskowitz told Fortune. “It’s ironic that FTX was going to be the savior of Voyager until their fraud was uncovered, and now Binance is supposed to be the next savior. Given the cases in bankruptcy, this may be the last chance for the victims to seek any recovery from their losses from crypto fraud.”
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
