Summary:
- Due to the UST/Terra crash, American investors are suing Binance US for damages.
- According to the plaintiffs, the corporation failed to register as a securities exchange or broker-dealer to provide UST.
- As attorneys search out affected parties, more lawsuits may be forthcoming.
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Binance.US and its CEO Brian Shroder are in hot water with American investors, who have launched a class-action lawsuit in the Northern District of California.
Plaintiff Jeffrey Lockhart from Utah alleges on behalf of all parties suing Binance.US that the company misled investors by claiming that staking UST for substantial returns was safe and that dollar reserves backed Terra in advertisements later retracted in an apparent admission of UST’s status as a stablecoin without fiat reserves.
Plaintiffs further contend that the crypto company neither disclosed to the Securities and Exchange Commission that UST was security nor registered with the agency as a securities exchange or broker-dealer.
investors file a class-action lawsuit against Binance Us after the Luna-UST fiasco. Image: CoinCulture
False assurances of safety lead to lawsuits.
The provisions such as restricted liability, class-action waivers, and burdensome dispute resolution schemes contradict the claim of the cryptocurrency exchanges that digital assets are secure for investors.
Informal client disputes at Binance.US include initiating a ticket with Customer Service and working with Customer Service to address [the] issue, failing which the customer must write an email with sufficient data for Binance.US to evaluate timely. The customer must send the business a hardcopy notice describing the nature and grounds of the claim or disagreement and laying forth the exact remedies requested.
Plaintiffs, represented by the legal firms Roche Freedman LLP and Dontzin Nagy & Fleissig LLP, seek an injunction ordering Binance.US to delist UST as the business continues to operate as an unregistered securities provider. Since Binance.US profited from transaction fees, the plaintiffs are also seeking compensation.
More lawsuits may be forthcoming.
The founder of Roche Freedman LLP advised LUNA investors who purchased LUNA or UST through Coinbase, Kraken, or Gemini to contact his law firm. Therefore, other lawsuits may be forthcoming. Investors from South Korea have already launched a lawsuit against the Terra/Luna project’s creators.
The SEC announced an investigation into Binance.US trading partners Sigma Chain AG and Merit Peak Ltd in February and is already investigating Binance, the global entity, for issuing Binance Coin (BNB) in 2017 during an initial coin offering (ICO).
