Binance Chief and Crypto Influencers Sued for $1 Billion for Promoting Unregistered Securities

Just when the world’s largest crypto exchange is coming to terms with the CFTC lawsuit over the violation of derivatives regulations, Binance finds itself in the middle of yet another major challenge.

Last week on March 31st, two law firms - Moskowitz Law Firm and Boies Schiller Flexner - filed a class-action lawsuit against Binance, its chief Changpeng Zhao as well as NBA star Jimmy Butler.

The lawsuit targets the crypto exchange for trading of cryptocurrencies which were in reality unregistered securities. Besides, the lawsuit also adds that social media influencer paid by Binance were promoting these instrument unlawfully. As a result, the lawsuit seeks compensation of more than $1 billion from Binance and the influencers.

After filing the case in the Southern District of Florida, Adam Moskowitz, founding and managing partner of the Moskowitz Law Firm, discussed the suit. “This is a classic example of a centralized exchange, which is promoting the sale of an unregistered security,” charges the complaint.

Furthermore, Moskowitz added: “We’ve been investigating these same unregistered security issues against Binance for over a year”. The complaint further notes that under the relevant securities laws, anyone purchasing unregistered securities will be entitled for damages equal to the losses they have suffered.

The defendants are ready to prove that they have been deceived and swayed by Binance and its team of influencers. In a word with the Fortune publication, Moskowitz further added: “The statute clearly states that if an influencer is promoting an unregistered security, and has a financial interest in doing so, the influencer may be liable to everyone who bought the assets. The exchange that facilitates the trades would be liable as well.”

The plaintiffs filing this case are three Americans - two from Florida and one from California, all of them claim to have lost money in coins promoted by Binance and its hired influencers. However, the complaint estimates that people eligible for the damages could be in the “millions”.

Interestingly, the complaint cites Binance’s native token, BNB, along with its Affiliate Program. The lawsuit makes the claim that Binance chief CZ burns the BNB tokens thereby reducing its supply in an effort to boost the price, an action that would brand BNB as a security.

“If we win on the unregistered securities issue, there will be no question that Binance and the influencers are liable,” Moskowitz told Fortune. “It’s ironic that FTX was going to be the savior of Voyager until their fraud was uncovered, and now Binance is supposed to be the next savior. Given the cases in bankruptcy, this may be the last chance for the victims to seek any recovery from their losses from crypto fraud.”