By George Ward
Binance–a cryptocurrency exchange, and its executive officer Changpeng Zhao are encountering legal issues. The United States Commission for Commodity Futures Trading (CFTC) recently initiated legal proceedings against Binance.
Now, another lawsuit has been undertaken by Boies Schiller Flexner (BSF) and Moskowitz Law Company, targeting Binance chiefs and various influencers, including NBA superstar Jimmy Butler. The lawsuit accuses them of promoting unlisted securities.
The two law companies filed the $1B lawsuit in a Florida southern district court. The lawsuit alleges that Binance participated in the exchange of unlisted securities and paid influencers to promote them, which is unlawful.
According to the lawsuit, this situation is a typical case of a CEX (centralized exchange) that supports the sale of unregistered securities. Moskowitz Law Company’s managing partner – Adam Moskowitz, talked about the matter with Fortune magazine.
BSF and MLF had previously collaborated to file a legal proceeding against VD, Voyager Digital. At that time, the law firms had asserted that influencers who promote “unregistered securities” would be responsible for any losses incurred by customers.
Based on similar allegations, Binance and several influencers, including Graham Stephen, YouTubers such as Ben Armstrong, and NBA superstar Jimmy Butler are facing accusations of jointly causing $1B in damages to their followers. Moskowitz Law Firm has been investigating these allegations against Binance for over a year, according to Moskowitz.
Millions Of Persons Will Be Eligible For Compensation
The legal proceedings filed by three American investors suggest that millions could claim damages. In future legal filings, the law companies intend to involve other Binance influencers in the case.
The plaintiffs in the lawsuit consist of one individual from California and two individuals living in Florida. According to Moskowitz’s statement in a recent interview:
“If an influencer promotes unlisted security and will gain financially, the statute explicitly states that the influencer would be accountable to all individuals who purchased the assets. Furthermore, the exchange responsible for facilitating the transaction would also be held accountable.”
The lawsuit further argued that Binance’s CEO, CZ, eliminates or burns the firm’s governance token (BNB). Thereby reducing its supply to inflate its value artificially. Per the filing, this move designates BNB to be a security.
The lawsuit also explains how Binance affiliates receive rebates on trades made by investors they hire, stating that they click through their unique links to sell and buy cryptocurrencies on Binance. As a result, the lawsuit also accuses Armstrong and Stephen of their unlawful promotion of unregistered securities.