The US-based trading platform Binance has been accused of misleading its users. The accusation stems from last month’s incident with Terra UST and its destroyed blockchain system. The lawsuit was filed in the city of California, with Roche Freedman LLP being the law firm behind it.
What is the Lawsuit?
When it listed the terrausd (UST), the lawsuit charged Binance US with not showing commitment to its consumers. They were failing to comply with federal and state investment regulations in the United States. In the lawsuit, they name UST as a “safe” asset. It emphasizes that “an early supporter of (Terraform Labs), Binance US is intimately familiar with UST and Luna.”
There were several advertisements on the lawsuit that accused Binance. One said locked staking on UST is “high yield, safe and happy earn.” An additional advertisement said UST is “fiat-backed”. Binance noticeably avoided mentioning that “UST is in fact a security”. Along with that, Binance did not register themselves with the US Securities and Exchange Commission as what we call a “securities exchange or as a broker-dealer”.
The lawsuit staed “Binance US’s failure to comply with the securities laws, and its false advertisements of UST, have led to disastrous consequences for Binance US’s customers in May 2022, in the span of just a few days, UST lost essentially all its value – a loss of approximately $18 billion”.
The lawsuit that accused Binance said that the collapse drove them to remove the false information. However, they are still selling Terra-based securities. In this regard, they stated. “Binance US’s parent company blithely added insult to injury when, on May 31, 2022, it began selling Luna 2.0 – a new token which, just like LUNA, is centrally controlled by Terraform Labs.”