A class-action lawsuit filed in the District Court of Northern California alleges that Binance and its CEO Changpeng Zhao violated federal and California law by harming cryptocurrency competitor FTX. The suit centers around tweets made by Zhao on the eve of FTX’s collapse.
A class-action lawsuit was recently filed in the District Court of Northern California, targeting Binance.US and its CEO Changpeng Zhao. The lawsuit, brought by California resident Nir Lahav, alleges multiple violations of federal and California laws related to unfair competition and attempts to monopolize the cryptocurrency market.
The core issue revolves around tweets posted by Changpeng Zhao on Twitter just before FTX’s collapse. In conjunction with these tweets, Binance decided to liquidate its holdings in the FTX utility token FTT. The lawsuit estimates that Binance may have held up to 5% of all FTT tokens.
In a subsequent tweet, Zhao announced Binance’s intention to acquire FTX but then backed out of the deal shortly afterward. The lawsuit alleges that Zhao’s public disclosure of this withdrawal harmed FTX, leading to its sudden collapse.
The plaintiffs argue that Zhao’s November 6th tweet, stating that Binance would liquidate its remaining FTT holdings, was misleading, as Binance had already sold its FTT holdings. They claim this tweet was intended to drive down the price of FTT in the market.