CZ, Binance, influencers facing $1B securities promo case

Five days after the United States Commodities Futures Trading Commission (CFTC) sued Binance and its CEO Changpeng “CZ” Zhao for suspected trading breaches, a $1 billion lawsuit was launched against the crypto exchange, CZ, and three crypto influencers for marketing unregistered securities.

Fortune reports that on March 31, the Moscowitz Law Group and Boies Schiller Flexner filed a $1 billion complaint in the Southern District of Florida alleging Binance’s participation in trading unregistered securities and paying influencers for the illegal advertising of such services. In describing the charges, the complaint stated:

“This is a classic example of a centralized exchange, which is promoting the sale of an unregistered security.”

In a prior case against Voyager, the legal firm asserted that promoters of “unregistered securities” are accountable for consumer losses. Based on identical allegations, Binance and the influencers—NBA player Jimmy Butler of the Miami Heat and YouTubers Graham Stephan and Ben Armstrong (BitBoy Crypto)—are being asked to pay $1 billion to compensate investors for their losses.

The complaint said, “We have been researching these exact unregistered security problems against Binance for over a year.” The promoters and exchanges that facilitate trading in these assets “would be responsible” for consumer losses. In addition, the action asserts that investors are not required to demonstrate that they were persuaded by the marketing.

While initiated by three US individuals, the lawsuit claims that “millions” of others may be entitled to compensation. The legal firm also intends to include other Binance influencers in future filings.

According to a story from the Financial Times, CZ and other top Binance officials have been obscuring the cryptocurrency exchange’s links to China.

“No longer do we publicize our office address… People in China may state explicitly that our office is not in China, Zhao allegedly remarked in a November 2017 workplace chat group.

Binance verified that the business “does not operate in China and does not have any technology, including servers or data, headquartered in China,” adding:

“While we did have a customer service call center based in China to service global Mandarin speakers, those employees who wished to remain with the company were offered relocation assistance starting in 2021.”

According to Binance, 8,000 of its full-time staff reside across Europe, the Americas, the Middle East, Africa, and Asia-Pacific.