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Binance and CEO face lawsuit over alleged role in FTX exchange collapse

Published Oct 03, 2023 13:58
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A group of investors, led by Nir Lahav, initiated legal proceedings against cryptocurrency exchange Binance and its CEO Changpenz “CZ” Zhao on Tuesday, blaming them for the collapse of rival exchange FTX. The lawsuit alleges violations of unfair competition laws and Security Exchange Commission (SEC) regulations.

The plaintiffs argue that CZ's tweets contributed to the downfall of FTX, with the court filing providing a chronological breakdown of these posts. They claim that CZ's "fear mongering" tweets triggered a rapid 14% drop in the price of FTX's native token, FTT, within just 24 hours. At the time of publication, FTT's price stands at $1.15.

The lawsuit further accuses CZ of using Twitter and other social media platforms to disseminate information aimed at damaging FTX Entities. The plaintiffs allege that these posts led to a hasty and unprecedented collapse of FTX Entities. Following CZ's tweets, the price of FTT reportedly plummeted from $25 to $3, which allegedly drove the exchange into bankruptcy before directors could implement necessary safeguards.

In addition to these accusations, the court filing also highlighted that former FTX CEO Sam Bankman-Fried was known for his advocacy of regulations. However, it is noted that the defendants expressed dissatisfaction with his regulatory efforts.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Binance and CEO face lawsuit over alleged role in FTX exchange collapse
 

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