A class-action lawsuit has been lodged against cryptocurrency exchange Binance and its CEO, Changpeng Zhao, on Monday. The plaintiff, a California resident, accuses Binance and Zhao of activities that reportedly led to the downfall of rival exchange FTX.
Binance and Zhao are alleged to have violated federal and Californian laws concerning unfair competition. The complaint argues that they sought to establish a monopoly in the crypto market by inflicting harm upon FTX.
The lawsuit brought forward by Nir Lahav puts emphasis on social media posts made by Zhao in early November, preceding the fall of FTX. Lahav argues that these posts, in conjunction with Binance’s choice to liquidate its FTX token (CRYPTO: FTT) holdings, led to the downfall of the competing exchange.
On Nov. 7, Zhao posted a tweet indicating Binance’s plans to acquire FTX, only to withdraw the statement the very next day. The lawsuit contends this action was not done in good faith and played a significant role in FTX’s collapse.
As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4
— CZ
Binance (@cz_binance) November 6, 2022
Moreover, the lawsuit alleges that Zhao’s subsequent tweet about liquidating any leftover FTT was misleading, as Binance had already offloaded its FTT holdings. According to Lahav, the tweet was specifically designed to cause a drop in FTT’s market price.
The lawsuit is seeking monetary damages, court costs, and the return of ill-gotten gains. At present, both Binance and FTX are under SEC scrutiny, with the criminal case against FTX CEO Sam Bankman-Fried scheduled to start on October 4 in New York.
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