Binance.US, the sister company of global cryptocurrency exchange Binance, is facing a class action lawsuit from investors over the sale of LUNA and TerraUSD (UST).
A group of investors filed a class action lawsuit in the Northern District of California on Monday, alleging that Binance sold unregistered securities in the form of LUNA and UST to investors and tricked them into buying them.
The lawsuit was brought by the law firms Roche Freedman and Dontzin Nagy & Fleissig on behalf of several investors who lost their money during the recent collapse of LUNA and UST.
The lawsuit alleged that Binance.US is not registered as a broker-dealer in the United States and thus clearly violates US securities laws.. The plaintiffs in the case accused the cryptocurrency exchange of knowingly promoting a flawed project that the parent company had previously invested in.
The lawsuit filing noted that the exchange not only supported and promoted the security token, but that its parent company also listed the second version of LUNA 2.0 after the failure of the first.
The suit also accused the exchange of false advertising, noting its claims that UST was backed by fiat, which was redacted after the crash.
An excerpt from the lawsuit read:
“Binance US’s breach of securities laws, and its false UST listings, have led to disastrous consequences for Binance US customers.”
The plaintiffs in the case have demanded a jury trial for all charges deemed indictable. Binance did not respond to Cointelegraph’s request for comment by press time.
Kyle Roche, founder of Roche Freedman, had previously requested LUNA investors to contact the firm should they buy LUNA on any of the major cryptocurrency exchanges in the United States. Thus, the lawsuit against Binance could be the first of many.
If you purchased $MOON or $UST on either @coinbase @krakenfx @binance or @Gemini, please reach out to [email protected] . My firm is coordinating an effort to help those who lost funds from the recent collapse of #terra and #Moon.
— Kyle Roche (@KyleWRoche) May 13, 2022
If you purchased $LUNA or $UST on @coinbase @krakenfx @binance or @Gemini, please contact [email protected]. My firm is coordinating an effort to help those who lost funds due to the recent collapse of #terra and #luna.
While South Korean investors filed a lawsuit against the founders of the Terra project the same week it went under, the latest case against Binance.US is the first in the Americas. Looking at the above tweet from the law firm implicated in the lawsuit, other US-registered cryptocurrency exchanges could face similar lawsuits in the near future.
Binance’s legal troubles continue to mount in the United States, as the lawsuit comes at a time when the Securities and Exchange Commission (SEC) is already investigating its 2017 BNB initial coin offering.
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