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The world's largest cryptocurrency exchange, Binance, along with its CEO and online promoters, are facing a new class-action lawsuit from a group of investors in Miami federal court. The lawsuit alleges that Binance's proprietary cryptocurrency, BNB, is an unregistered security that was illegally sold to American investors. Under US law, investors who purchase unregistered securities have the right to seek compensation in court.
Binance has declined to comment on the pending litigation and plans to challenge the allegations in court. This is the latest in a series of 78 securities class-action lawsuits brought against cryptocurrency entities since 2016.Binance and its influencers are facing a new class action lawsuit for illegally promoting cryptocurrency, just a week after Binance was sued by regulators for violating trading regulations.
According to Fortune, the Moskowitz Law Firm and Boies Schiller Flexner have filed a $1 billion lawsuit against the crypto exchange and several of its partners, claiming that Binance traded cryptocurrencies as unregistered securities, and that influencers paid by the exchange unlawfully promoted the tokens on social media. These firms have previously collaborated to file two class action suits against problematic crypto exchanges.
A new class action lawsuit has been filed against Binance and its affiliated influencers for allegedly promoting crypto unlawfully, just a week after regulators sued Binance for violating trading rules. The lawsuit, filed by Moskowitz Law Firm and Bois Schiller Flexner, is seeking $1 billion in damages and alleges that Binance traded cryptocurrencies as unregistered securities while its influencers unlawfully promoted the tokens on social media.
The complaint singles out four influencers, including Binance CEO Changpeng Zhao, and claims that the number of people affected by Binance's actions could be in the millions. Moskowitz Law said it would continue to add other Binance influencers to the lawsuit.
After a year-long investigation, the legal team is now pursuing damages of $1 billion.
The lawsuit was filed just a few days after the Commodity Futures Trading Commission (CFTC) filed a separate lawsuit against Binance, accusing the company of violating trading and derivatives regulations. The announcement of the lawsuit against Binance follows a week after the Commodities Futures Trading Commission filed a 74-page complaint against the cryptocurrency exchange, accusing it of trying to bypass financial regulations and trading rules by encouraging US clients to use VPNs and creating fictitious anti-money laundering reports.
Binance is currently the largest cryptocurrency exchange globally, with its BNB token being the fourth-largest digital asset by market capitalization at $48.8 billion. The US regulators are closely monitoring the operations of the exchange. The recent lawsuit filed on Friday mentioned the BNB token and how its "burn rate" is decided by Zhao, making it a prime example of a centralized exchange that promotes unregistered securities.