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Binance CEO CZ Faces Legal Action Over Alleged Use of Twitter to ‘Hurt FTX’

2 mins
Updated by Kyle Baird
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In Brief

  • Investor affected by the collapse of FTX sues Binance and its CEO, CZ, blaming them for the exchange's downfall.
  • Plaintiffs accuse Binance and CZ of violating unfair competition laws and Security Exchange Commission (SEC) laws.
  • Lawsuit alleges CZ's tweets resulted in a 14% drop in the price of FTX's native token, FTT, within a 24-hour timeframe.
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An investor impacted by the cryptocurrency exchange FTX’s collapse has initiated legal proceedings against rival exchange Binance and its CEO Changpeng ‘CZ’ Zhao. He blames them partially for the exchange’s collapse.

The investor leading the lawsuit claims that CZ’s tweets were also part of the downfall of the exchange.

Plaintiffs Accuse Binance and CZ of Unfair Competition Law Violations

In a recent court filing, a group of investors, led by Nir Lahav, initiated a lawsuit against Binance and its CZ, seeking compensation for the decline in the value of their crypto portfolios due to the FTX collapse.

“Plaintiff brings this action against Defendants for injury under unfair competition and violations of Security Exchange Commission (SEC) laws for attempts to monopolize the cryptocurrency platform market by hurting the competitor trading platforms operated by the FTX Entities.”

The filing provided a breakdown of CZ’s tweets in a chronological sequence. It states that the alarming tweets caused a 14% decrease in the price of FTX’s native token, FTT, in just 24 hours.

CZ's Tweet Regarding FTX's Bankruptcy, In Court Filing. Source: CourtListener
CZ’s Tweet Regarding FTX’s Bankruptcy, In Court Filing. Source: CourtListener

CZ’s Posts Allegedly Triggered Catastrophic Consequences

The filing further alleges that Zhao publicly disseminated information on Twitter and other social media platforms “to hurt FTX Entities.” It explains that his fearful posts resulted in a rushed and unprecedented collapse of FTX.

“Zhao showed no qualms about publicly tweeting to hurt FTX Entities.”

It additionally asserts the damage that the tweet caused following the rapid decline in the price of FTT. The price plummeted from $25 to $3. This allegedly led to FTX going bankrupt without directors having enough time to implement the necessary safeguards.

At the time of publication, FTT’s price is $1.15.

FTT Token Price Chart 1 Month. Source: BeInCrypto
FTT Token Price Chart 1 Month. Source: BeInCrypto

It additionally highlighted that former FTX CEO Sam Bankman-Fried was recognized for his advocacy of regulations. However, the defendants expressed dissatisfaction with his “regulatory efforts.”

The widely speculated fraud trial for Bankman-Fried is set to happen this week. On October 3, the jury selection will occur, followed by the trial commencing on October 4.

Bankman-Fried had hoped for temporary release from prison before the trial began to better prepare for his case. However, the judge repeatedly denied the requests.

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In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.

Ciaran Lyons
Ciaran is a cryptocurrency journalist based in Sydney, Australia. He particularly enjoys writing about CBDC developments and the practical implementations of cryptocurrency in real-world scenarios.