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Binance US Stock Exchange sued by crypto investors for stablecoin collapse



(Reuters) – Binance US and its CEO were sued on Monday by a US investor who claims that the cryptocurrency exchange incorrectly marketed Terra USD as a safe asset before the so-called stablecoins collapse in value last month.

Stablecoins are digital tokens linked to the value of traditional assets, such as the US dollar, and are popular as safe havens in times of cryptocurrency turmoil. But Terra USD’s value fell last month, breaking its 1: 1 dollar point and contributing to a tumult of other cryptocurrencies such as Bitcoin.

In the trial of Binance and CEO Brian Shroder, Jeffrey Lockhart, a resident of Utah, said that Binance incorrectly advertised Terra USD as “safe”

; and backed by fiat currency, when in fact it was an unregistered security.

Mr. Lockhart said that Binance’s failure to register with the US government as a securities exchange limits the disclosure of assets traded on the platform, which harms investors.

“Binance and other exchanges were crucial factors in this devastating failure to comply with securities laws,” said Tibor Nagy of the law firm Dontzin Nagy & Fleissig, which represents Mr. Lockhart. “Cryptocurrencies made huge profits by ignoring securities laws and causing real harm to real people.”

A spokesman for Binance said the exchange is registered with the Financial Crimes Enforcement Network – a unit within the US Treasury Department – and follows all applicable rules.

“These allegations are without merit and we will defend ourselves vigorously,” the spokesman said in a statement, adding that the exchange will delist Terra USD, a decision made before the lawsuit was filed.

Mr Lockhart wants himself and other investors who bought Terra on Binance registered as a class.


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