Crypto Investors Sue Binance US Exchange After Stablecoin Collapse

Crypto Investors Sue Binance US Exchange After Stablecoin Collapse

US investors sued Binance US and its CEO  Brian Shroder for allegedly falsely marketing Terra USD as a safe asset just before the stablecoin spiraled into a death dive in May. 


Stablecoins are digital tokens pegged to the traditional assets, eg. USD, making these a safe choice during a crypto meltdown. But Terra USD broke this 1:1 dollar peg when its value plummeted last month, which resulted in other crypto currencies such as Bitcoin taking a hit as well. 


Jeffrey Lockhart, the plaintiff, filed the said lawsuit complaining that Binance falsely advertised an unregistered crypto as “safe” and backed by fiat currency. According to Lockhart’s lawyer from Dontzin Nagy & Fleissig law firm Tibor Nagy, Binance’s failure to comply with security regulations resulted in his client and other investors like him taking major losses.


A binance spokesperson, on the other hand, asserted that Binance complies to the regulations set out by the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department and had already delisted Terra USD currency before the filing of the lawsuit. 


This is not the first time that Binance is being sued for selling unregistered tokens. A similar lawsuit was filed in 2020 as well. That lawsuit was dropped by the court because the complainants had taken too long to file the case, and Binance was not a domestic exchange. However, the current situation is different because the lawsuit has been filed within weeks and the target is the Binance US.

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