Binance.US and its CEO, Changpeng Zhao (CZ), are facing a class-action lawsuit filed in the Northern California District Court. Nir Lahav, a resident of California and the initiator of the lawsuit, alleges that Binance engaged in unfair competition and market-exclusivity efforts, with a particular focus on undermining FTX, a competing platform.
The legal action revolves around CZ’s tweets from early November 2022, a critical time for FTX’s existence. Specifically, CZ publicly disclosed Binance’s decision to divest its equity stake in FTX’s utility token, FTT, on November 6th. The plaintiffs argue that this move was not just a misunderstanding but had malicious intent. They assert that Binance parted ways with its FTT shares ahead of the tweet and that the announcement was made to devalue FTT in the market.
Furthermore, the content of the tweets showed hesitation in “supporting corridor activists against other players in the industry behind their backs,” which the plaintiffs interpreted as an implicit criticism of the management efforts of FTX CEO Sam Bankman-Fried.
According to Lahav, CZ’s actions are believed to have been intentional, aiming to destabilize FTX. Following the tweet, the price of FTT “plummeted,” dropping from $23.1510 to $3.1468, pushing FTX into a state of insolvency. This resulted in the board of directors and executives being thrown into chaos, unable to recover the situation.
Based on these events, the plaintiffs argue that this was a plan concocted by Binance and CZ to disable their competitive rival and solidify the company’s market position.
Currently, the plaintiffs are seeking compensation for damages, court costs, and the distribution of unjust gains through seven charges, with the hope that thousands of individuals can participate in the class-action lawsuit and receive some form of “reparation.”