For advertising TerraUSD as “safe” given its dollar peg, Binance is being sued by an American investor following the stablecoin’s downfall in May 2022.
Utah resident Jeffrey Lockhart named the crypto exchange and its CEO Brian Shroder defendants in his class-action suit. He claims that Binance endorsed the safety of the stablecoin despite it being “an unregistered security.”
“Binance and other exchanges were critical enablers of this devastating failure to comply with the securities laws,” said the law firm representing Lockhart. “Crypto exchanges made massive profits by flouting securities laws and causing real harm to real people.”
The crypto exchange responded, clarifying that it is registered with the Financial Crimes Enforcement Network (FinCEN) under the US Treasury Department. It further claimed that the said allegations “are without merit” and it plans to defend the firm vigorously.
However, Binance added that it is delisting TerraUSD from its exchange, a decision it said it has already made even before the lawsuit was filed.
TerraUSD lost its peg to the dollar in May, which is purported to be a sophisticated attack. The value crashed down and alongside it, the value of the Luna token. The blockchain itself, Terra, halted trading following the dismal value of the digital assets.
Losses from the implosion of the crypto assets are estimated to be around US$60 billion. A few weeks following the crash, Terra relaunched itself–a 2.0 version–together with the Luna 2.0 token, but minus the stablecoin counterpart.
Lockhart is hoping to have fellow TerraUSD investors through the Binance exchange join him in the suit.
Information for this briefing was found via Reuters and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.