Binance.US, the U.S arm of global exchange platform Binance, has been charged, in a class-action lawsuit, for allegedly selling LUNA and UST tokens as securities.
Particularly, the suit is for its role in misleading investors and sales of the Terra network tokens as unregistered securities. It was filed by two law firms, Dontzin Nagy & Fleissig and Roche Freedman, representing over 2000 investors in the Northern District of California.
According to the suit, Binance.US’s refusal to adhere to laws governing securities and its misleading adverts caused devastating consequences for users. The plaintiffs claimed that the platform ran foul of US securities law by misleading users into acquiring the tokens.
It also mentioned that Binance.US projected UST as a stablecoin while that’s untrue and as such should be held accountable. The investors also accused Binance.US of intentionally advertising a flawed project which the parent company had earlier funded.
It added that Binance listed LUNA 2.0 after the crash of the first version.The investors are requesting a trial by a competent jury for all triable charges. The lawsuit targeted at Binance.US deviates from the usual practice of targeting the firm behind a token after its collapse.
Should it be successful, it would have far reaching impacts on the world of crypto exchange.
Crash of UST and the resulting lawsuits
While the lawsuit against the exchange platform by investors is the first in the US, its South Korean counterparts have filed a lawsuit against the backers of the Terra project in the wake of the crash.
Likewise, tweets from Kyle Roche, founder Roche Freedman suggest that there would be many more lawsuits in the coming days. Kyle had asked investors to reach out to his firm if they acquired LUNA on any of the trading platforms in the US.
The Terra ecosystem was reduced to almost nothing after the UST collapse which its founders promised will always sit at $1 was depegged.
All efforts to revive the Terra ecosystem yielded no fruit. About $40 billion investors’ funds was reportedly lost to the crash.