Binance US got a lawsuit over promoting Luna and UST tokens with the plaintiffs alleging the exchange were unlawfully selling unregistered securities and didn’t describe them accurately as “safe” assets so let’s read more today in our latest Binance news.
The class-action lawsuit was filed today against Binance US alleging that the exchange misled consumers about the safety of the Terra stablecoin UST and the LUNA native token. As Binance US got a lawsuit that claims that the exchange violated federal law both by selling LUNA and UST with cryptocurrencies that were claimed to be securities that should have been registered with the SEC and to operate as unregistered securities offerings.
$BUSD is one of the only fully regulated, licensed, and fiat-backed stablecoins available.
Unlock the full #Binance ecosystem and secure some peace of mind with one of the market’s most secure stablecoins 👇https://t.co/fNfBtUBp1p
— Binance (@binance) May 16, 2022
Filed this morning in the US District Court for the District of Northern California with the class action marking the first attempt to utilize the court system and to rectify the damage caused by the collapse of LUNA last month which wiped out some $40 billion in value. The plaintiffs cited Binance advertisements like in the months preceding the UST crash and touted the stablecoin as fiat-backed and safe which the plaintiff’s attorneys argue are demonstrably fake. UST is an algorithmic stablecoin that unlike others backed by real-world assets relied on the algorithmic stablecoin with LUNA for stability.
As designed, the mechansim was created to permit the exchange of 1 UST for 1 LUNA should UST falter the peg to the value of the US dollar and this setup was meant to incentivize the speculators to close the value gap between UST and the dollar. The mechanism worked last month, UST’s sudden deppeging brought LUNA down along and crashed both tokens’ value and wiped out thousands of investors that included the undisclosed number of plaintiffs party to today’s lawsuit.
According to the suit, Binance’s failure to disclose the UST and LUNA risks to potential investors was not incidental but quite intentional and a key to its long-term strategy of Binance. The complaint reads:
“Binance U.S.’s business model is premised on illegally enabling the sales of unregistered securities to as many U.S. investors as possible, as often as possible.”
Keep your crypto as safe as possible on #Binance ⬇️https://t.co/kZmVQnBrrN
— Binance (@binance) February 13, 2021
A lawyer familiar with the matter said that the attorneys behind today’s suit went after binance.us because suing an exchange posed the best opportunity to recoup the money for investors that were wiped out in the Terra crash. According to the same source, the companies representing the plaintiffs in this case, plan to bring a similar lawsuit against Terra.
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