A class-action lawsuit against Binance US has been filed in California that alleges the exchange misled investors and sold unregistered securities to roughly 2,000 plaintiffs. The case was filed by the law firm Roche Freedman LLP, a company known for high-profile crypto lawsuits during the last few years. The lawsuit accuses Binance US of marketing terrausd (UST) as a firmly fixed stablecoin tied to the value of the U.S. dollar.
On Monday, the U.S.-based Binance trading platform Binance US has been served with a lawsuit that accuses the company of selling unregistered securities and misleading investors. The accusations derive from last month’s Terra UST de-pegging incident and the entire Terra Classic blockchain ecosystem getting obliterated.
The class-action lawsuit was filed in California and the law firm behind the case is Roche Freedman LLP, the company that was involved in the Kleiman vs. Wright case and other well known crypto lawsuits.
Binance US CEO Brian Shroder is also named in the lawsuit.
The lawsuit accuses Binance US of not being committed to its customers by not complying with U.S. federal and state securities laws when it listed terrausd (UST). The lawsuit claims UST was sold as a “safe” asset and as “an early supporter of [Terraform Labs], Binance US is intimately familiar with UST and LUNA.”
Screenshot of the lawsuit against Binance US.
The lawsuit shows an advertisement showing Binance offering locked staking on UST and it says “high yield, safe & happy earn.” Another advertisement shown in the lawsuit calls UST “fiat-backed.” The class action says that Binance US failed to disclose that “UST is in fact a security” and Binance “refused to register” with the U.S. Securities and Exchange Commission (SEC) as a “securities exchange or as a broker-dealer.”
“Binance US’s failure to comply with the securities laws, and its false advertisements of UST, have led to disastrous consequences for Binance US’s customers in May 2022, in the span of just a few days, UST lost essentially all its value — a loss of approximately $18 billion,” the lawsuit alleges. According to the lawsuit, after the UST collapse Binance removed the false adverts but notes that Binance has not stopped selling Terra-based securities.
The lawsuit states:
The well known whistleblower Fatman helped the suit move forward by gathering 2,000 Terra investors. Fatman has disclosed that another class-action suit aimed at helping grieving Terra investors will follow the case filed by Roche Freedman on Monday. Fatman tweeted about the current class action against Binance US on Monday as well.
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