A California-based Binance user, Nir Lahav, has launched a class-action lawsuit against the major crypto exchange Binance and its CEO, Changpeng Zhao. The suit alleges that Binance attempted to monopolize the crypto market by undermining its competitor FTX, contributing to its downfall.
At the heart of the dispute are several tweets made by Zhao back in November that allegedly triggered the implosion of FTX. Zhao, and by extension Binance, were reportedly liquidating their FTX utility tokens, FTT, and are believed to have owned up to 5% of all FTT tokens. Shortly after, Zhao revealed via Twitter that Binance would not go through with a planned acquisition of FTX, which, according to the lawsuit, led to FTX’s rapid collapse.
Legal reps for the plaintiff argue that Zhao’s tweets were intended to manipulate the market and lead to a decrease in the price of FTT. Based on his tweets, the plaintiff’s claim suggests that Binance, directly and indirectly, was targeting FTX CEO Sam Bankman-Fried to curb his regulatory efforts.
The lawsuit further states that Zhao’s bad-faith attempt to acquire FTX and subsequent tweet caused the FTT price to plunge dramatically, pushing the FTX exchange into bankruptcy. It contends that this did not afford FTX’s leadership the opportunity to protect its clients or implement safeguarding measures. The plaintiff demands compensation for damages, court expenses, and restitution of unlawful profits. The lawsuit also claims that there are likely thousands of similar cases.
Interestingly, despite the ongoing legal drama between them, both Binance and FTX are under scrutiny from the Securities and Exchange Commission. A separate case against Bankman-Fried is set to begin on October 4th in New York. Amidst such allegations, Zhao has denied any claims of market manipulation, maintaining that Binance was not targeting its competitors.