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Binance Faces Class Action for Damaging Rival Exchange FTX

Binance, led by its CEO Changpeng Zhao, finds itself at the center of a class action initiated in the Northern District of California. The lawsuit, brought by Nir Lahav, accuses the cryptocurrency giant and its leader of violating both federal and California laws. The main contention revolves around a series of tweets by CZ in early November that allegedly had detrimental effects on rival exchange FTX. The subsequent drop in value of FTX’s utility token FTT and the eventual collapse of FTX are claimed to be directly influenced by Binance’s actions.

Decoding the Sequence of Events

The events took a dramatic turn when CZ revealed on X (formerly known as Twitter) the intention of Binance to sell its FTT following revelations about the finances of Alameda Research and FTX. Shortly after some dramatic news, Binance announced it was acquiring FTX. However, this announcement was short-lived as Binance backed out of the deal a day later.

The lawsuit argues that CZ’s intentional disclosure of this change on social media platforms was a direct attempt to harm FTX. Furthermore, CZ’s tweet on November 6 regarding Binance’s decision to liquidate their remaining FTT raised eyebrows. Critics argue that this tweet, combined with the revelation that Binance had already sold its FTT, was a calculated move to drive down the market value of FTT. According to the lawsuit, these actions maliciously pushed FTX into bankruptcy, depriving its executives and board members of the chance to protect its clients and stakeholders.

The Consequences and Community Response

As stated in the lawsuit, both FTX and Binance are under the watch of the SEC. A criminal proceeding against FTX CEO Sam Bankman-Fried is set to begin on October 4 in New York. Although CZ has openly refuted allegations of sneaky competitive tactics, his denial has not silenced the whispers within the crypto community.

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