An investor from the United States has filed a lawsuit against Binance U.S., the platform for buying, selling, and trading cryptocurrency, and its CEO Brian Shroder, claiming that the cryptocurrency exchange misrepresented Terra USD as a secure asset prior to the stablecoin’s value collapse last month.
Describe a stablecoin. A stablecoin is a type of digital token whose value is determined by the value of a traditional asset or any other form of currency, such as the US dollar or gold. In the cryptocurrency market, stablecoins are advertised as safe havens for investment.
Yet Terra USD’s price, which is regarded as a stablecoin in the cryptocurrency world, plummeted last month. According to reports, it lost its 1:1 dollar peg and caused a decline in Bitcoin and other cryptocurrencies.
The American investor’s lawsuit
Jeffery Lockhart of Utah claimed that the cryptocurrency exchange misrepresented Terra USD as a secure stablecoin backed by fiat money when it was actually an unregistered securities in the complaint he filed against Binance and its CEO Shroder.
According to Jeffrey Lockhart, Binance is not registered with the US government as a securities exchange, preventing it from fully providing information about the assets transacted on its platform.
According to Tibor Nagy of Dontzin Nagy & Fleissig, who is representing Lockhart, Exchanges like Binance are important enablers of the catastrophic failure of compliance with the securities laws. These exchanges earn greatly from flagrantly flouting these regulations and “serious harm to real individuals.”
Nevertheless, a representative for Binance claimed that the cryptocurrency is actually registered with the Financial Crimes Enforcement Network, a division of the US Treasury Department, and complies with all applicable laws.
The investor’s claims are unfounded, and we will firmly defend them, the Binance representative continued. A spokesman for the exchange claims that the decision to delist Terra USD was made prior to the filing of the complaint.
