Binance Draws Legal Fire Over Claims Of FTX Manipulation Trending Crypto News

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In a class-action lawsuit filed on October 2 in the District Court of Northern California, Binance (Binance Holdings Limited, BAM Trading Services, BAM Management US Holdings) and its CEO Changpeng Zhao (“CZ”) are facing serious allegations surrounding attempted monopolization of the crypto market, purportedly through damaging strategies against their competitor FTX.

The legal battle spearheaded by Nir Lahav, identified as a California resident, is unwrapping a complex tapestry of competitive corporate strategies, social media statements, and consequential market fluctuations.

Binance And “CZ” Hit With Class Action Lawsuit

The epicenter of the lawsuit draws from a series of statements made by Changpeng Zhao on Twitter, especially in the pivotal time frame leading to FTX’s downfall in early November 2022. A particular focal point is a tweet from Zhao on November 6, wherein he expressed, “Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books.”

The plaintiffs argue that this statement was not only misleading, considering Binance had already sold its FTT holdings, but also deliberately designed to plunge the price of FTT. The litigants find evidence in a consequential segment of the tweet, stating, “We are not against anyone. […] But we won’t support people who lobby against other industry players behind their backs.” This, they posit, indicates Zhao’s antagonism towards FTX CEO Sam Bankman-Fried’s regulatory initiatives.

A notable plunge in FTT’s price from $23.1510 to $3.1468, followed Zhao’s aforementioned tweet. The lawsuit underscores this event, indicating, “Zhao’s tweet resulted in FTT price declining… This significant drop plummeted FTX Entities into bankruptcy without giving… FTX Entities’ executives and board of directors a chance to salvage the situation and put in safe guards to protect its clients and end-users.”

Adding another layer to the controversy, Zhao announced on November 7th, through a Twitter post, that Binance had initiated a letter of intent to acquire FTX. However, this intention was rescinded merely a day later.

According to the legal filing: “Zhao publicly disseminated this information [on the withdrawal of the acquisition offer] on Twitter and other social media platforms to hurt FTX Entities that ultimately lead to a rushed and unprecedented collapse of FTX Entities.”

The lawsuit digs deep into various alleged violations, with its roots intertwining with both federal and California law related to unfair competition, aiming to bring to light the purportedly malicious tactics employed to disadvantage FTX. With the stakes high, the suit demands monetary damages, court costs, and the disgorgement of ill-gotten gains across seven counts. It has been stated, “Plaintiff believes that there are thousands of members of the proposed class.”

Regulatory Clouds Over Binance And FTX

In the midst of the unfolding legal drama, both Binance and FTX are concurrently entwined in separate SEC actions, potentially indicating larger regulatory pressures within the crypto sphere. The criminal case against the former FTX CEO, Sam Bankman-Fried, is scheduled to commence on October 4th in New York.

Binance US is currently under investigation by several US authorities, such as the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Additionally, there’s persistent speculation that the US Department of Justice (DOJ) has been building a case against Binance and its founder, CZ, for more than a year.

At press time, BNB traded at $215.2, just above the 20-day EMA at $214.2.

BNB price holds above $210, 1-day chart | Source: BNBUSD on

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