Five days after Binance and its CEO Changpeng “CZ” Zhao were sued by the United States Commodity Futures Trading Commission (CFTC) for alleged trade violations, a new $1 billion lawsuit was filed against the cryptocurrency exchange, CZ and three cryptocurrency influencers for promoting unregistered securities.
On March 31, the law firm Moscowitz and Boies Schiller Flexner filed the $1 billion lawsuit in the Southern District of Florida, alleging Binance’s involvement in trading unregistered securities and paying influencers for illegal promotion. of such services, according to Fortune. Explaining the charges, the lawsuit stated:
“This is a classic example of a centralized exchange promoting the sale of an unregistered security.”
In a previous lawsuit against Voyager, the law firm alleged that influencers promoting “unregistered securities” are liable for customer losses. Based on similar claims, Binance and the influencers – NBA Miami Heat star Jimmy Butler, and YouTubers Graham Stephan and Ben Armstrong (BitBoy Crypto) – are challenged to pay $1 billion in damages caused to the investors.
“We have been investigating these same unrecorded security issues against Binance for over a year,” the lawsuit adds. Promoters and exchanges that facilitate trading with these assets “would be liable” for client losses. In addition, the lawsuit claims that investors are not required to prove that they were influenced by the ads.
Although three US citizens filed the suit, the firm alleges that “millions” of people could be eligible for damages. The law firm also plans to bring more Binance influencers to the lawsuit in future filings.
Meanwhile, CZ and other top Binance executives have been hiding the cryptocurrency’s ties to China, according to a Financial Times report.
“We no longer publish our office addresses…people in China can directly say that our office is not in China,” Zhao had allegedly said in a company message group in November 2017.
However, speaking to Cointelegraph, Binance confirmed that the company “does not operate in China nor do we have any technology, including servers or data, based in China,” adding:
“While we had a China-based customer service call center to serve global Mandarin speakers, those employees who wished to remain with the company were offered relocation assistance beginning in 2021.”
According to Binance, its 8,000 full-time employees live in Europe, the Americas, the Middle East, Africa, and Asia-Pacific.
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