A class action lawsuit has been filed against Binance for the alleged harm FTX has previously suffered ScrgruppEn

A class action lawsuit was filed against Binance.US and Binance CEO Changpeng Zhao on October 2 in the Northern California District Court. claim Various violations of federal and California unfair competition law for attempting to monopolize the cryptocurrency market by harming its competitor FTX. The lawsuit was filed by Nir Lahav, identified only as a California resident.

There are posts made by Zhao on Twitter (now X) in early November on the eve of the FTX collapse. The posts were made in conjunction with the Defendants’ decision to liquidate their holdings in the FTT Utility Token on November 6. Prosecutors estimated that Binance owns up to 5% of all FTT tokens.

The lawsuit against Binance and Changpeng Zhao. Source: CortListener

The next day, Zhao said in a Twitter post that Binance had signed a letter of intent to acquire FTX, but backed out of that deal a day later. According to the lawsuit:

“Zhao released this information publicly [on the withdrawal of the acquisition offer] on Twitter and other social media platforms to harm the FTX entities, ultimately leading to a rapid and unprecedented collapse of the FTX entities.

She began her arguments by defending the SEC’s policies on cryptocurrencies and invoking the Howey and Reves Supreme Court decisions, among other things.

She went on to claim that Zhao’s November 6 tweet was, “due to recent revelations [sic] “To light, we have decided to liquidate any remaining FTT on our books,” this was false and misleading, given that Binance had already sold its holdings of FTT, and the post was “aimed at causing the market price of FTT to decline.”

RELATED: New documentary from FTX to highlight relationship between SBF and CZ

Prosecutors found proof of their claim in the same post by Chow, where he wrote: “We are not against anyone. […] But we will not support people who lobby other players in the industry behind their backs. Prosecutors took the final sentence to indicate that Binance opposed the “regulatory efforts” of FTX CEO Sam Bankman-Fried.

The lawsuit alleges that Zhao’s bid to acquire FTX was not made in good faith and that the incident would “ultimately lead” to FTX’s collapse:

“Zhao’s tweet caused the price of FTT to drop from US$23.1510 to US$3.1468. This huge drop pushed the FTX Entities into bankruptcy without giving the executives and board of directors of FTX Entities a chance. [sic] To save the situation and put safe guards to protect its customers and end users.

The lawsuit seeks monetary damages, court costs and reversal of ill-gotten gains based on seven counts. “Plaintiff believes there are thousands of members of the proposed class,” the lawsuit stated.

As the lawsuit noted, both Binance and FTX are currently subject to SEC action. The criminal case against Bankman-Fried will begin on October 4 in New York. Chow addressed potential accusations of unfair competition in the same tweet mentioned in the lawsuit. “As for any speculation about whether this is a move against a competitor, it is not,” he wrote.

However, his statement did not stop speculation to this effect within the cryptocurrency community. Cryptocurrency exchange CEOs traded jibes on Twitter for weeks afterward.

Magazine: Details on FTX’s bankruptcy filing, Binance’s crypto industry fund, and the US central bank digital currency beta: Hodler’s Digest, November 13-19

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