- Investor Lawsuit: An investor has filed a lawsuit against Binance and its CEO CZ, attributing their actions to the collapse of the FTX exchange.
- Twitter Impact: The lawsuit claims CZ’s tweets caused a 14% drop in FTX’s native token price, adding to the exchange’s woes.
- Regulatory Advocacy: The case also involves former FTX CEO Sam Bankman-Fried, known for his regulatory efforts, with a fraud trial in the spotlight.
An investor who suffered losses due to the collapse of the cryptocurrency exchange FTX has initiated legal proceedings against the competing exchange Binance and its CEO Changpeng ‘CZ’ Zhao. The investor holds them partially responsible for FTX’s downfall.
The investor leading the lawsuit alleges that CZ’s tweets played a role in the exchange’s collapse.
Plaintiffs Accuse Binance and CZ of Violating Unfair Competition Laws
In a recent court filing, a group of investors, led by Nir Lahav, filed a lawsuit against Binance and its CEO CZ, seeking compensation for the depreciation of their cryptocurrency portfolios following the FTX collapse.
“The plaintiff brings this action against the defendants for injuries stemming from unfair competition and violations of Security Exchange Commission (SEC) laws, as they allegedly attempted to monopolize the cryptocurrency platform market by harming the competing trading platforms operated by the FTX Entities.”
The filing presents a chronological breakdown of CZ’s tweets, claiming that these alarming tweets led to a 14% drop in the price of FTX’s native token, FTT, within just 24 hours.
CZ’s Posts Allegedly Triggered Catastrophic Consequences
The filing further alleges that Zhao publicly shared information on Twitter and other social media platforms with the intent to harm the FTX Entities. It argues that his alarming posts resulted in a hasty and unprecedented collapse of FTX.
“Zhao did not hesitate to use public tweets to harm the FTX Entities.”
It also highlights the damage caused by these tweets, including the rapid decline in the price of FTT from $25 to $3. This alleged price drop ultimately led to FTX going bankrupt, with its directors unable to implement necessary safeguards in time.
As of the time of this publication, the price of FTT stands at $1.15.
The filing additionally points out that former FTX CEO Sam Bankman-Fried had been recognized for his advocacy of regulations. However, the defendants expressed dissatisfaction with his “regulatory efforts.”
The highly anticipated fraud trial of Bankman-Fried is scheduled for this week. Jury selection will occur on October 3, followed by the trial commencing on October 4.
Bankman-Fried had sought temporary release from prison prior to the trial to better prepare his case, but his requests were repeatedly denied by the judge.
Disclaimer: Please note that the viewpoints and perspectives expressed by the author, as well as any individuals referenced in this article, are intended solely for informational purposes. They should not be construed as financial or investment advice. It’s important to acknowledge that investing in or trading cryptoassets carries inherent financial risks.