Binance Sued for Attempted Crypto Monopoly Against Rival FTX

Binance Holdings Ltd. is facing a lawsuit alleging it violated securities and competition laws for attempts to monopolize the cryptocurrency platform market, the latest legal challenge for the company.

Plaintiff Nir Lahav, who invested in cryptocurrencies, accuses Binance of violating the Securities Exchange Act as well as California’s Unfair Competition Law by hampering competitor trading platforms operated by entities of rival FTX, according to a proposed class action filed Monday in the US District for the Northern District of California.

The class is supposed to cover anyone who was invested with FTX before Nov. 6, 2022, and after Nov. 8, 2022, “during the time period of volatility.”

FTX filed for bankruptcy last year after Binance backed out of a deal to acquire it.

Binance and its CEO Changpeng Zhao “have openly acknowledged their rivalry and animosity towards FTX Entities and its founders for their regulatory efforts,” the complaint stated. “When an opportunity to hurt FTX Entities arose, Zhao did not hesitate to trigger the collapse of FTX Entities stock in the market.”

Zhao is widely linked to sparking a customer run on FTX after he raised questions about the FTX-issued cryptocurrency token FTT and on Nov. 6, 2022 said Binance would sell all its FTT holdings.

Binance, the world’s largest crypto exchange by volume, was founded in China and is now headquartered in the Cayman Islands. The complaint says it also operates out of China.

Earlier: Crypto Exchange Binance, CEO Zhao Ask Court to Dismiss SEC Suit

The Securities and Exchange Commission is also suing Binance and Zhao, with accusations of mishandling customer funds and breaking securities rules.

The case is Lahav v. Binance Holdings Limited, N.D. Cal., No. 4:23-cv-05038, 10/2/23.