As if lawsuit initiated by the United States Commodity Futures Trading Commission (CFTC) wasn’t enough, crypto exchange Binance has a new $1 billion lawsuit filed against against it, CZ and three crypto influencers involved in promoting certain crypto assets
As reported by Fortune, the Moscowitz Law Firm and Boies Schiller Flexner filed the $1 billion lawsuit against Binance in the Southern District of Florida. It claims the crypto exchange was involved in trading unregistered securities and paid influencers to unlawfully promote of such services.
The lawsuit concerns not only the crypto exchange itself as an organization, but also its CEO Changpeng “CZ” Zhao and three crypto influencers, including the NBA star Jimmy Butler and YouTubers Graham Stephan and Ben Armstrong (BitBoy Crypto).
The plaintiffs claim that they have been “investigating these same unregistered security issues against Binance for over a year,” with “millions” of people theoretically eligible for financial losses caused by promoting “unregistered securities”.
The lawsuit is filed on behalf of three plaintiffs — two Florida residents and a person from California — who lost money while trading digital assets. The law firm plans include more Binance influencers in future filings and claims that investors have no obligation to prove they were influenced by the advertisements.
CFTC Lawsuit Against Binance
The new legal trouble has hit Binance less than a week after the Commodity Futures Trading Commission (CFTC) charged Changpeng Zhao, Binance Holdings Limited, Binance Holdings (IE) Limited, and Binance (Services) Holdings Limited for violations of the Commodity Exchange Act (CEA) and CFTC rules.
The regulator claims that Binance deliberately ignored the legal requirements and was aimed at maintaining cash flow. In particular, CFTC alleges that Binance had an ineffective compliance program and instructed both its employees and customers to circumvent compliance controls. According to the filing, the platform has not implemented AML procedures and proper CFT measures.
Promoting crypto assets has also brought a hefty $258 billion lawsuit to Elon Musk. The investors are alleging he operated a pyramid scheme to promote the cryptocurrency Dogecoin (DOGE), while the billionaire’s lawyers call the lawsuit a “fanciful work of fiction,” asking the judge for dismissal.