- Terra investors have filed a lawsuit against Binance.US, complaining that the exchange misrepresented the UST stablecoin.
- The investors have complained that Binance.US represented the stablecoin as a safe investment and erroneously claimed that it was backed by fiat currency.
- Binance.US also allegedly failed to comply with regulations and securities laws, though the company contests this claim.
Several Terra investors have filed a class-action suit against Binance.US, according to a legal document filed Monday.
Binance.US Targeted in Lawsuit
Terra investors are suing Binance.US, alleging that the exchange used deceptive marketing tactics.
According to the filing, Binance.US misrepresented the stability of Terra’s UST stablecoin. In particular, Binance.US described UST as a “safe” investment within certain advertisements. UST memorably lost its peg last month, causing an ecosystem-wide collapse that erased more than $40 billion of value in the space of a few days.
In another advertisement, Binance.US also erroneously described UST as a fiat-backed stablecoin. UST was designed as an algorithmic stablecoin; unlike the likes of USDT and USDC, it was not backed by any collateral. Instead, it was supposed to maintain its peg to the dollar as part of a dual token mechanism with Terra’s volatile asset, LUNA.
The lawsuit additionally states that Binance.US went on to sell the revived versions of Terra’s tokens after reaping profits from pre-collapse sales of the cryptocurrencies.
Furthermore, the suit alleges that Binance.US failed to comply with securities laws and that the company is unregistered as a broker-deal or exchange. The firm has contested this claim by stating that it is “registered by FinCEN and adheres to all applicable regulations.”
The complaints concern thousands of investors, the lawsuit states. The collective value of the claim exceeds $5 million.
The Terra Fallout
The case concerns Binance.US, the California-based subsidiary of the world’s top crypto exchange.
Binance.US is considerably smaller than Binance: as the 15th largest exchange, it processes a 24-hour trading volume of around $500 million.
Binance itself does not appear to be facing a lawsuit but has endured similar criticisms in recent weeks. During the fallout from Terra’s implosion, Binance CEO Changpeng Zhao independently criticized Terraform Labs’ handling of the incident and its attempt to recover the network.
Though Terra launched a new version of its blockchain following the collapse, the project remains in a precarious position overall. The new LUNA token launched as part of the revived network is worth $2.58. Terra’s original stablecoin, now named USTC, is currently worth $0.01. Meanwhile its affiliated token, now known as LUNC, is virtually worthless.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
SEC Expands Probe Into Terraform Labs UST Marketing: Report
The U.S. Securities and Exchange Commission has reportedly expanded its Terraform Labs investigation beyond the Mirror Protocol probe and into the company’s marketing practices concerning its now crumpled UST stablecoin….
Terraform Labs Loses Appeal, Ordered to Comply With SEC Investigation
The U.S. Court of Appeals has ordered Terraform Labs and its CEO Do Kwon to comply with SEC’s investigation into the Mirror Protocol on federal securities laws infringement allegations. Terraform…
Five Blockchains Competing Over Terra Developers
Polygon, Algorand, Injective, Kadena and VeChain are among the protocols having recently made overtures to developers wishing to join a new ecosystem following the spectacular disintegration of Terra and its…