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No way to seek compensation, turn to the exchange? Binance.US sued by investors for alleged violations of securities laws, claims USDT backed by fiat.

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No way to seek compensation, turn to the exchange? Binance.US sued by investors for alleged violations of securities laws, claims USDT backed by fiat.

Binance.US, the American exchange of Binance, is facing a collective lawsuit from investors for offering trading of LUNA and TerraUSD (UST) tokens, citing violations of U.S. securities laws and promotion of security-like tokens. Binance has not responded to this news but provided an explanation for the three-hour suspension of Bitcoin withdrawals last night.

No Way to Claim? Turning to Exchanges?

The law firms Roche Freedman LLP and Dontzin Nagy & Fleissig represent multiple investors in a lawsuit, alleging:

  • Violation of U.S. securities laws
  • Operating as an unregistered broker-dealer in the U.S.
  • Promoting security-type tokens, launching LUNA 2.0 after collapse
  • Selling unregistered securities to investors through trading pairs like LUNA and UST

According to the lawsuit document, plaintiffs point out that Binance.US deliberately promoted its parent company Binance's previous investment in Terra, even though it was a flawed project; and prior to the collapse, the exchange described UST as a "fiat-backed" stablecoin, later revising the description post-collapse.

Following Terra's collapse in May, Kyle Roche, partner at Roche Freedman LLP, tweeted stating:

If you bought LUNA or UST on exchanges like Coinbase, Kraken, Binance, Gemini, etc., please contact [email protected]. Our firm is working to assist investors who suffered losses due to the collapse of UST and LUNA.

Previously, Binance founder Changpeng Zhao revealed in an interview with Fortune magazine that in 2018, Binance Labs invested $3 million in Terra, receiving 50 million LUNA tokens, but never transferred or cashed out the tokens, resulting in a loss of $1.6 billion in potential earnings at its peak.

Additionally, on the evening of 6/13, Binance announced a 30-minute suspension of BTC withdrawals, which eventually took nearly three hours to resume. The official post-analysis attributed the delay to troubleshooting hardware facilities on the wallet integration node, causing early transactions to be broadcasted on the network after node repair. During the outage, only BTC withdrawals were affected, while deposits were still possible, and withdrawals could also be executed through other networks like ERC20 and BEP20.