Binance Exchange and CEO face yet another legal battle

Lawsuits are looming for Binance as the cryptocurrency exchange has been dragged into a new class action lawsuit seeking $1 billion in damages.

According to a Fortune report, Moscowitz Law Firm and Boies Schiller Flexner filed a class action lawsuit against Binance, its CEO Changpeng ‘CZ’ Zhao and three crypto influencers – basketball star Jimmy Butler, Graham Stephan and Ben Armstrong ‘Bitboy.’

Binance accused of listing unregistered securities

According to the report, Binance listed unregistered securities as cryptocurrencies and paid social media influencers to promote these assets. The law firms claim they investigated the crypto exchange for over a year before filing the lawsuit.

One of the cryptocurrencies considered unregistered security in the case is the Binance token BNB. The filing argued that the BNB burn program turns the asset into an unregistered security because it reduces the coin’s supply to increase its value.

The lawsuit is filed on behalf of three plaintiffs — two Florida residents and one Californian — who said they lost money while trading digital assets promoted by Binance and the influencers. The complaints suggested that the case could have millions of people entitled to compensation.

Speaking about the case, Adam Moskowitz of the Moskowitz Law Firm said:

“The statute clearly states that if an influencer promotes an unregistered security, and has a financial interest in doing so, the influencer may be liable to anyone who purchased the assets. The exchange that facilitates the trades will also be responsible.”

Binance had not yet responded to BeInCrypto’s request for comment at the time of writing.

Meanwhile, this is not the first time the law firm has filed a class action lawsuit against a crypto firm. Moskowitz filed a similar lawsuit against the bankrupt crypto exchange FTX and its promoters such as Thomas Brady, Kevin O’Leary and others. The firm also filed another lawsuit against bankrupt crypto lender Voyager, alleging that its Earn Program account constituted sales of unregistered securities.

Binance Rising Legal Troubles

The timing of this lawsuit puts additional legal pressure on Binance. The Commodities Futures Trading Commission (CFTC) recently sued the exchange and CZ for violating derivatives trading laws.

Apart from that, there are reports that the US Department of Justice is investigating the exchange and its founder.

Meanwhile, Binance said it would cooperate with regulators and has had support from the broader crypto community. The exchange is the largest crypto exchange by trading volume and controls over 70% of the market, according to BeInCrypto data.