CZ and Binance USA were sued before the FTX boss appeared in court
A group of users in the US sued Changpeng Zhao (CZ) and Binance.US, accusing the exchange of causing FTX to collapse to monopolize the market.
On October 2, a class action lawsuit targeting Binance.US and CEO Changpeng Zhao (CZ) was submitted to the Northern California District Court. The plaintiffs claim that Binance competed unfairly and took actions that led to FTX's bankruptcy . They also cited posts by CZ on Twitter, now X, in early November 2022 before FTX collapsed.
It all started on November 6, when CZ announced on X about holding FTX's FTT token. At that time, the founder of Binance was said to own more than two billion USD worth of FTT.
On November 7, CZ confirmed the decision to liquidate these tokens, citing "a necessary risk management step". A day later, FTX founder Sam Bankman-Fried and CZ announced a strategic agreement between the two parties. However, the conflict peaked on November 9 when CZ announced that Binance was withdrawing from the agreement and selling all FTT for fear of a second Luna crash.
FTX founder Sam Bankman-Fried (left) and Binance CEO CZ. Illustration: Cointelegraph
According to the plaintiff, CZ's public announcement of token sale information and withdrawal from the agreement seriously damaged FTX, leading to the exchange's rapid collapse. They also believe that CZ's tweet on November 6 with the content "because new information has come to light, we have decided to liquidate all remaining FTT in the investment portfolio" was misleading, causing the market to The market panicked and token prices plummeted.
"The tweet caused the price of FTT to plummet from 23 USD to more than 3 USD, pushing FTX into bankruptcy. Company leaders no longer have a chance to save and protect users," the group filed a petition. essay. They ask for monetary damages, litigation costs, and a division of the profits that Binance made from the collapse of FTX.
The lawsuit was filed in the context of Sam Bankman-Fried's criminal trial, which will take place on October 3 in New York.
Sam Bankman-Fried, born in 1992, is considered a prodigy of the cryptocurrency market. His name is associated with famous projects such as BlockFi, Voyager Digital and Celsius. In 2019, he founded FTX and actively lobbied to build a legally protected cryptocurrency exchange. In 2021, when FTX was at its peak, Bankman-Fried announced that it wanted to acquire both CME Group and Goldman Sachs bank. However, the " castle in the sand " began to collapse when financial gaps were announced in November 2022. On November 11, FTX declared bankruptcy.
On December 12, the Bahamas government announced the arrest of Sam Bankman-Fried, after which he was extradited to the US. The former FTX CEO faces charges related to commodity fraud, securities fraud and financial violations during the US Presidential campaign.
According to CNN , Sam Bankman-Fried could face more than 100 years in prison if convicted. Meanwhile, legal experts say that the collapse of FTX could be one of the most serious frauds in US history. About $8.9 billion in customer deposits and investment funds were blown away.
Days before the trial, Aditya Baradwaj, a former employee of FTX, told Cointelegraph that it was a "benevolent dictatorship" that caused FTX to collapse. Under his watch, Bankman-Fried used investors' money to spend recklessly on personal interests such as renting a plane to deliver online goods to all employees; Buy real estate called " pineapple house "...
Sam Bankman-Fried maintains his innocence. The historic trial will take place from October 3 and is expected to end on November 9. Both former FTX employees and investors were also invited to testify against Bankman-Fried.