Per a document filed with the U.S. District Court of Northern District of California, Binance.US users want compensation for their LUNA-UST investments. The lawsuit has been filed as a class action in the United States against Binance.US and its CEO Brian Shroder.
Related Reading | Binance Hits Back At Reuters, Claims Data Sharing Report With Russia Is ‘Categorically False’
The plaintiff claims that Binance.US has failed to “abide by U.S. federal” and securities regulations. They claimed that the exchange platform offered UST, Terra Classic algorithmic stablecoin, and LUNA now dubbed LUNC as a “safe investment”.
In that sense, they claimed that the cryptocurrency and the digital assets are non-registered securities with the U.S. Securities and Exchange Commission (SEC). They based this argument on the fact that the success or failure of LUNA depended on a centralized third party, Terraform Labs (TFL), and its co-founder and CEO Kwon Do-Hyung also known as Do Kwon.
The class-action lawsuit claims:
U ST was advertised and sold to investors as a “safe” asset that could be used to earn substantial returns, including in the form of interest. The respective prices of UST and LUNA both depended upon, and continue to depend upon, the efforts and success (or failure) of TFL.
As seen below, the plaintiffs presented a recent Binance.US advertisement as evidence. In this picture, the exchange promotes its UST staking product with a 19.63% annual percentage reward (APR) followed by a “High Yield, Safe, and Happy Earn”.
However, the advertisement seems to be from Binance, Binance.US’s parent company. The U.S.-based platform has tried to differentiate itself from the global exchange. These efforts have translated to their brand and marketing campaigns, as seen below.
https://t.co/AZwoBOgsqS #Staking will also allow customers to automatically restake the rewards they receive on a weekly basis, ensuring a high APY through compounding.
Learn More: https://t.co/KsADN0MF1R pic.twitter.com/vmIkHmZLXH
— Binance.US
(@BinanceUS) June 7, 2022
Despite the above, the plaintiffs claimed that the U.S.-based exchange allegedly failed its users when promoting its products:
Despite enjoying those fantastic profits, Binance U.S. plainly failed to comply with federal and state securities laws. Binance U.S. failed to disclose that UST is in fact a security, and that it is selling these securities, even though (i) there is no registration statement in effect for them (…).
The LUNA Aftermath, Binance Under Public Scrutiny
The U.S. securities regulator has been ambiguous about its position on cryptocurrencies. The Commission failed, according to certain actors within the industry, to provide legal and regulatory clarity.
In step, it has engaged in legal battles with some of the actors in the crypto industry, including Binance.US and the LUNA’s Do Kwon. The class action claims:
Binance U.S.’s failure to comply with the securities laws, and its false advertisements of UST, have led to disastrous consequences for Binance U.S.’s customers: in May 2022, in the span of just a few days, UST lost essentially all its value—a loss of approximately $18 billion. Investors who purchased UST on Binance U.S. were wiped out, learning quickly that, contrary to Binance U.S.’s advertisements, UST was not “safe,” “stable,” or “fiat-backed.”
A spokesperson for Binance.US told Bitcoinist the following regarding the class action and its accusations:
Binance.US is registered by FinCEN and adheres to all applicable regulations. These assertions are without merit and we will defend ourselves vigorously.
The exchange has experienced a lot of scrutiny in past days as it faces an SEC investigation related to the alleged sales of an unregistered security, as mentioned, their native token Binance Coin (BNB).
In addition, an investigation from Reuters claims that Binance has been used as a platform to allegedly launder money, and support a drug operation in Russia. Binance’s CEO Changpeng Zhao dismissed the accusations.
The Reuters article yesterday is a huge waste of time and resources. This is the last I'll say on it, and the last our team will interact with the writer.
The author continues to wear it as a badge of honor on Twitter when his fiction pieces get fact-checked after he publishes.
— CZ
Binance (@cz_binance) June 7, 2022
Related Reading | Breaking: U.S. SEC Launches Investigation Against Binance Coin (BNB)
At the time of writing, BNB’s price trades at $225 with an 11% loss on the 4-hour chart.
You can get bonuses upto $100 FREE BONUS when you:
💰 Install these recommended apps:
💲 SocialGood - 100% Crypto Back on Everyday Shopping
💲 xPortal - The DeFi For The Next Billion
💲 CryptoTab Browser - Lightweight, fast, and ready to mine!
💰 Register on these recommended exchanges:
🟡 Binance🟡 Bitfinex🟡 Bitmart🟡 Bittrex🟡 Bitget
🟡 CoinEx🟡 Crypto.com🟡 Gate.io🟡 Huobi🟡 Kucoin.
Comments