Binance Faces Legal Action Over Unregistered Securities and Paid Influencer Promotions
On March 31st, 2023, two US law firms, Moskowitz Law Firm and Bois Schiller Flexner, filed a class action lawsuit against Binance, the world’s largest cryptocurrency exchange. The lawsuit alleges that Binance traded unregistered securities and paid influencers to illegally promote its tokens on social media.
The complaint named Binance CEO Changpong Zhao (CZ) as the defendant, along with influencers NBA player Jimmy Butler, investment-related content creators Ben Armstrong, and Graham Stephens. The Moskowitz Law Firm said it plans to add other influencers to the class action lawsuit in the future.
According to the lawsuit, Binance signed “brand ambassador” contracts with celebrities such as Butler to help promote Binance and attract new customers. An influencer argued that Binance would not have been able to grow as it does without promoting its unregistered securities.
This is how dumb Adam Moskowitz is:
He’s suing me for promoting unregistered securities through affiliate program at Binance
What evidence does he use?
He uses quotes from the CFTC action vs Binance. You know, the one where CFTC calls $BTC, $ETH, $LTC, & $BUSD commodities 🤦🏻♂️
— Ben Armstrong (@Bitboy_Crypto) April 3, 2023
The lawsuit was filed by three plaintiffs who allege they lost money due to cryptocurrencies promoted by Binance. However, the number of people affected by Binance’s actions could be “millions.”
One of the defendants, Ben Armstrong, commented on the lawsuit, saying that Moskowitz Law Firm is suing him for promoting unregistered securities in the Binance affiliate program.
The Moskowitz Law Firm cites a complaint against Binance by the US Commodity Futures Trading Commission (CFTC) as evidence. The CFTC considers some cryptocurrencies to be commodities, but in this lawsuit, they are considered securities, pointing out a difference of opinion.
This lawsuit against Binance and its related influencers marks a significant step in the regulatory landscape of the cryptocurrency industry. The accusations of trading unregistered securities and paying influencers to promote tokens on social media are serious allegations that could have far-reaching consequences for Binance and its reputation.
It remains to be seen how this lawsuit will play out and what impact it will have on Binance and the wider cryptocurrency industry. However, it is clear that regulators and law firms are paying increasing attention to the industry, and businesses must take compliance seriously to avoid similar legal actions in the future.
Read more:
- Binance Accused Of Hiding Office In China Despite Withdrawal Claims: Financial Times
- CFTC Files Complaint Against Binance And Founder Over Alleged Violation Of US Regulations