Yet another lawsuit for Binance
Binance is in the headlines once again. This time the exchange platform is being sued for misleading advertisements of TerraUSD ahead of its big fiasco.
The lawsuit comes from an investor that goes by the name of Jeffrey Lockhart. Lockhart, who filed the lawsuit individually, claims it is made on behalf of all the other investors who invested in the stablecoin on the Binance.US platform - a subsidiary of the exchange in America.
The document states that investors lost everything when Terra’s LUNA saw a major collapse and they blame Binance for presenting Terra USD (UST) as a safe digital asset to invest in. As stated in the lawsuit, “UST was advertised and sold to investors as a “safe” asset that could be used to earn substantial returns, including in the form of interest”. It follows that Binance U.S. failed to “comply with federal and state security laws” and to present UST as security. Despite the major fallback, it also states that the platform insulted its users by continuing to sell TFL digital assets, particularly the Luna 2.0 token. The lawsuit also noted that if Binance wishes to operate on the American market, it must do so according to the U.S. federal and security laws, as neither UST nor LUNA are registered with any government regulator.
Source: Binance US Luna Class Action
The stablecoin TerraUSD created by Terraform Labs and its CEO Do Kwon lost its entire value in May of this year, which led to a loss of around 18$ billion. Being an algorithmic stablecoin, UST was tied up with Terra’s token, LUNA. The way it operated, until the recent collapse, was by permitting the exchange of 1UST for 1 LUNA, otherwise, it would fall from being linked to the U.S. dollar. This way speculators could close the value gap between USD and UST.
The UST ad on Binance has respectively been removed. It is also rumored that other exchanges are next in line for TerraUSD-related lawsuits.
Binance recently had a whirlwind of bad rep: an investigation by Reuters stated that the company was “a conduit for the laundering of at least $2.35 billion in illicit funds”, and users from Colombia filed lawsuits for frozen accounts. There was also a case of leaked client information.
