Binance.US was sued over sale of UST stablecoins

The platform was accused of using misleading advertising and selling tokens as unregistered securities

13.06.2022 - 15:15

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2 min

What’s new? Some 2 000 retail investors in the Terra project, who lost their investments as a result of the collapse of the ecosystem, have filed a lawsuit against the US arm of cryptocurrency exchange Binance, Binance.US. The class action complaint was filed in Northern California on behalf of the US law firm Roche Freedman LLP. The platform was accused of using misleading advertising and selling tokens as unregistered securities.

Class action

What does the lawsuit say? When the rates of the algorithmic stablecoin TerraUSD (UST) and its backing token LUNA plummeted to zero in May, thousands of retail investors and large companies suffered losses. The lawsuit alleges that Binance.US gave false information about the stability of the asset. According to the plaintiffs, misleading advertising is to blame for their losses. The suit also alleges that the platform was not registered as a broker-dealer or an exchange, which may be a violation of the Securities Act in connection with the listing of the stablecoin, which was also not registered as a security.

In June, the US Securities and Exchange Commission (SEC) initiated an investigation into the UST collapse. The regulator will check whether the marketing strategy of the stablecoin violated federal investor protection laws.

In mid-May, South Korean law firm LKB & Partners intended to file a lawsuit against Terraform Labs CEO Do Kwon on behalf of retail investors over the collapse of the ecosystem.

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