In a class action lawsuit filed in Northern California earlier this week, crypto exchange Binance.US was accused of misleading investors about the Terra ecosystem. The lawsuit, U.S.-based law firm Roche Freedman LLP, alleges that Binance.US marketed Terra’s dollar-based UST as more stable than it actually was. Accordingly, when USTC and LUNC (old LUNA) suddenly dropped sharply in early May 2022, thousands of unsuspecting retail investors were completely caught off guard. The lawsuit claims that Binance.US’s misleading advertising was the primary cause of those losses.
The lawsuit also alleges that Binance.US was not registered as a broker deal or a proper crypto exchange, which may have violated securities laws after the exchange listed what might be an unregistered security in UST. In related news, FatMan – an account that has suddenly become famous recently when (s)he revealed facts related to Terra, also said (s)he would sue Terraform Labs. FatMan helped orchestrate the suit by organizing a group of 2000 Terra aggrieved investors who allege they were mislead by a number of entities. This account claims to start the fight by filing mass class-action lawsuits against various exchanges.
In the opposite side, after a month of being investigated by the Korean government, CEO Do Kwon and Terraform Labs continue to face embezzlement allegations. The situation got even worse when the US Court denied an appeal Kwon filed against the SEC regarding Terraform’s Mirror Protocol (MIR).
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