Legal Action Amid FTX’s Collapse
After the FTX collapse in the previous year, a lawsuit emerged against Binance and its CEO, Changpeng Zhao (CZ). The plaintiffs claim CZ intentionally caused a decline in FTX’s token, FTT, through his tweets. This legal action follows a tumultuous event in the crypto sector and raises questions about social media’s influence on cryptocurrency prices. The case brings complexity to the forefront, showcasing the intricate legal dynamics within the crypto industry.
Collective Lawsuit Targets Binance and CZ
A collective class-action lawsuit has been filed against Binance exchange and its globally renowned CEO, Changpeng Zhao. In this legal case linked to the insolvency of FTX, which will see FTX’s imprisoned CEO, Sam Bankman-Fried (SBF), attend a court hearing for the first time, the plaintiff group holds Binance responsible.
Seeking Compensation
Nir Lahav, an FTX user, is leading a group of plaintiffs in a legal action against Binance. They are seeking compensation for the loss of value in their FTX portfolios. The plaintiffs contend that Binance’s actions violated SEC regulations, creating unfair competition and contributing to FTX’s financial troubles that eventually led to bankruptcy. This legal dispute underscores the importance of regulatory compliance in the cryptocurrency industry and its potential impact on market competition and stability.
“CZ Manipulated with Tweets”
According to information in the official complaint, the plaintiffs also hold Binance and CZ accountable for the decline of the FTT token. The group claims that CZ’s tweets caused a 15% drop in FTT within 24 hours. They further allege that CZ engaged in manipulation through Twitter and did not speak the truth regarding the company (FTX).
A Troubled Situation
Recalling the situation, discussions between Binance and FTX management took place on November 9 when the condition at FTX worsened. However, no agreement was reached regarding a rescue plan. CZ expressed in a tweet during that time, “At first, we thought we could help FTX, but we realized the situation was much worse than we could control. A sad day, we tried, but it didn’t work out.”
It All Started with a Media Leak
The collapse of FTX initially began with a media leak that revealed the majority of the exchange’s assets were composed of tokens supported by FTX, including FTT and SOL. This revelation shook investor confidence, leading to asset outflows from the exchange.
The plummet in FTT also placed FTX and its sister company, Alameda, in a more challenging position. Ultimately, both companies declared bankruptcy. SBF, who will attend a court hearing for the first time today, has repeatedly claimed that Binance played a significant role in their experiences.
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