Class action filed against Binance over the FTX collapse

California investor Nir Lahav filed a class action against Binance and its CEO Changpeng Zhao, accusing them of unfair competition in relation to the victim of the FTX collapse the FTX collapse.

The plaintiff contends that the defendants sought to monopolise the market, damaging FTX and its affiliated platforms.

The tweets published by Zhao in early November 2022 are at issue. In one thread, the Binance chief announced the decision to liquidate the company’s assets in FTT. According to Lahav, this accounted for up to 5% of the supply of the utility token FTX.

Subsequently, the Binance chief announced a strategic partnership with a competitor that envisaged a possible acquisition of the platform.

But on November 10, Binance declined to acquire FTX, citing the results of due diligence and negative press reports.

«Zhao publicly spread this information on Twitter and other social networks to harm the FTX group’s businesses, which ultimately led to the rapid and unprecedented collapse of the holding», the plaintiff said.

According to him, Zhao’s post on November 6 about the intention to liquidate Binance’s assets in FTT was misleading, since the exchange had already sold the tokens. The post was intended to trigger a fall in the market price of FTT, Lahav contends.

“Liquidating our FTT is just post-exit risk management, which LUNA taught us. […] We are not against anyone. But we will not support people who lobby against other industry players behind their backs.”

Liquidating our FTT is just post-exit risk management, learning from LUNA. We gave support before, but we won’t pretend to make love after divorce. We are not against anyone. But we won’t support people who lobby against other industry players behind their backs. Onwards.

— CZ ? Binance (@cz_binance) November 6, 2022

The suit alleges that Binance’s bid to acquire FTX was made unfairly and, in the end, led to the collapse of the latter:

«Zhao’s tweet led to a drop in FTT’s price from $23,151 to $3,1468. This substantial decline left FTX bankrupt, depriving management of the opportunity to salvage the situation and to take steps to protect its customers and end users».

Lahav is seeking damages from the defendants, payment of court costs, and disgorgement of ill-gotten gains on seven counts. He believes thousands of participants may join the suit.

As reported in June, the U.S. Securities and Exchange Commission filed a lawsuit against Binance, bringing 13 counts.