A California resident has filed a class-action lawsuit against Binance.US and its CEO, Changpeng Zhao, in the District Court of Northern California on October 2nd. The lawsuit alleges various violations of federal and California laws related to unfair competition and an attempt to monopolize the cryptocurrency market by causing harm to its competitor, FTX. The plaintiff, identified only as a California resident named Nir Lahav, claims that Binance’s actions, particularly tweets by CEO Changpeng Zhao in November, led to the collapse of FTX.
The lawsuit focuses on posts made by Zhao on Twitter in early November, just before FTX’s collapse. These posts coincided with Binance’s decision to liquidate its holdings in the FTX utility token, FTT, on November 6th. The plaintiffs estimated that Binance held up to 5% of all FTT tokens.
Zhao’s tweet on November 6th, stating, “Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books,” is at the center of the lawsuit. The plaintiffs argue that this tweet was false and misleading because Binance had already sold its FTT holdings and that it was intended to cause the price of FTT in the market to decline.
The lawsuit further alleges that Zhao’s proposal to acquire FTX was not made in good faith and that his actions would ultimately lead to the collapse of FTX. The significant drop in FTT’s price, from US $23.1510 to US $3.1468 following Zhao’s tweet, is cited as a key factor that led to FTX’s bankruptcy
