Binance, a leading cryptocurrency exchange, is facing a new class action lawsuit seeking $1 billion in damages for listing unregistered securities and promoting them through social media influencers.
The lawsuit, filed by Moscowitz Law Firm and Boies Schiller Flexner, claims that the Binance token (BNB) is considered unregistered security due to its burn program which reduces the coin’s supply and boosts its value. This legal action adds to the growing list of legal troubles for Binance, which is also being investigated by the US Department of Justice and recently sued by the Commodities Futures Trading Commission (CFTC).
Details of the Lawsuit Against Binance
The lawsuit names Binance CEO Changpeng ‘CZ’ Zhao and three crypto influencers – basketball star Jimmy Butler, Graham Stephan, and Ben Armstrong (aka Bitboy) – as defendants. The case was filed on behalf of three plaintiffs who lost money while trading digital assets promoted by Binance and the influencers and has the potential to include millions of eligible claimants.
The filing argues that the influencers, who were paid to promote the unregistered securities, may also be liable for the damages. Adam Moskowitz of Moskowitz Law Firm stated, “The statute clearly states that if an influencer is promoting 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.”
Despite the growing legal challenges, Binance remains the largest crypto exchange by trading volume, controlling over 70% of the market according to BeInCrypto data. The exchange has stated that it will cooperate with the regulators and has the support of the wider crypto community.
This is not the first time the Moscowitz Law Firm has filed a class action lawsuit against a crypto firm. The firm has previously filed similar lawsuits against FTX and Voyager, both of which are now bankrupt. This latest lawsuit adds to the growing concerns over the regulation of the cryptocurrency industry and the legal responsibilities of crypto exchanges and influencers.