Since the collapse of Terra stablecoin (UST) and its native token, investors of Terra have been one way or the other looking into the reason behind the event, leading to probes and scrutiny of associated companies and cryptocurrency exchanges involved.
However, the US branch of the world’s largest cryptocurrency exchange, Binance, has been slapped with a lawsuit by nearly 2,000 Terra investors on Monday. This class-action lawsuit filed against Binance.US in Northern California is the first US-based court filing against Terra.
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Terra investors in the 72-page lawsuit alleged that Binance.US misled investors regarding Terra. False marketing took the front stage in the lawsuit as the major reason for the investors losing out on funds. The fact that LUNA veered close to zero came as a shock to many. Binance.US was called out for promoting the sale of the stablecoin and carrying out airdrops of assets that were “designed to increase trading volume.”
In the complainants’ claims, Binance.US failed to “abide by U.S. federal” and securities regulations. They claimed that the exchange platform offered UST, Terra Classic algorithmic stablecoin, and LUNA now dubbed LUNC as a “safe investment”.
Therefore, they claimed that the digital assets and cryptocurrency are non-register securities with the US Securities and Exchange Commission, according to their argument, the failure or success of Luna token depended on a centralized third party. Terraform Labs and its CEO, Do Kwon.
The plaintiffs however went ahead to provide evidence of advertisement by the Binance.US, in the advertisement, Binance.US promoted its UST staking product with a 19.63% annual percentage reward (APR) followed by a “High Yield, Safe, and Happy Earn.”
Binance.US has always been trying to make itself unique amongst global exchanges, an attempt which has translated its branding and marketing strategy as shown below;
Despite this, the complainants alleged that the US branch of the cryptocurrency exchange has failed its users while promoting its product.
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