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Binance.US Terra crypto class action overview:
- Who: Cryptocurrency trading platform Binance is being sued by a consumer
- Why: The consumer says they and others were misled about stablecoin terraUSD (UST) and the Terra blockchain ecosystem
- Where: United States
Cryptocurrency exchange Binance.US misled investors about the Terra blockchain ecosystem ahead of its crash last month, a new class action lawsuit alleges.
Plaintiff Jeffrey Lockhart filed a class action complaint against Binance.US June 13 in a California federal court, alleging violations of United States securities laws.
The class action lawsuit is the first major U.S.-based court filing relating to Terra, whose UST and LUNC tokens wiped out around $40 billion in investor funds when they crashed last month, Yahoo News reports.
The lawsuit alleges that Binance.US marketed Terra’s dollar-based UST as more stable than it actually was.
According to the complaint, when UST and its sister token luna classic (LUNC) crashed to zero in May, thousands of unsuspecting retail investors were blindsided.
The market started crashing May 7. By the end of May 2022, the price of UST was down to approximately 1 cent—leaving investors who had purchased and held the supposed stablecoin with losses of approximately 99%, the lawsuit states.
“This collapse of UST was devastating for investors, who were made to believe that
UST was a ‘safe’ ‘fiat-backed stablecoin.’ An incredible number of investors lost much, if not all, of their life savings.”
In the days following Terra’s decline, its largest Reddit forum was filled with accounts of suicides.
Binance.US not registered as exchange
The plaintiffs say they were tricked by false and misleading advertising by the company.
The lawsuit also alleges that Binance.US is not registered as a broker-deal or an exchange, which may be in violation of securities law after it listed what might be an unregistered security in UST.
Not named in the complaint was Terra’s co-founder, Do Kwon. Kwon reportedly made claims that UST would always sit safely at $1.
It is not clear whether Kwon or his company will join Binance.US in facing potential legal penalties for their role in promoting Terra.
Binance.US told Yahoo that it would be defending itself “vigorously” against the claims, which it deemed “without merit.”
The lawsuit seeks to represent a nationwide class defined of all persons or entities who transacted in UST on Binance U.S. during a certain period.
The plaintiff is seeking certification of the class action, damages, fees, costs, a jury trial and an injunction.
Amid class actions against cryptocurrency exchange companies, and with stories about cryptocurrency theft in the news, consumers may be asking themselves whether it’s safe to invest in crypto and who is responsible for hacks. Click here for more information.
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