Law firm Roche Freedman LLP has filed a class-action lawsuit against the American division of the crypto exchange Binance and its CEO Brian Schroeder on behalf of LUNA and the UST stablecoin investors.
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According to the 72-page complaint, Binance.US offered unregistered securities to US citizens, misleading them. Lawyers pointed out that the division was not registered as a broker-dealer, which violated local law.
According to investors, Binance.US facilitated the sale of UST and participated in the airdrop of tokens “intended to increase trading volume.” In May, Roche Freedman LLP partner Kyle Roche called for LUNA and UST investors who had bought assets on the Coinbase, Gemini, and Binance exchanges to contact the firm for "help."
If you purchased $LUNA or $UST on either @coinbase @krakenfx @binance or @Gemini, please reach out to [email protected] . My firm is coordinating an effort to help those who lost funds from the recent collapse of #terra and #luna.
— Kyle Roche (@KyleWRoche) May 13, 2022
UST and LUNA prices started falling sharply on May 10. Terra’s algorithmic stablecoin UST lost the dollar peg and dropped as low as $0.3.
On May 28, the head of Terraform Labs, Do Kwon, announced the launch of the Terra 2.0 mainnet. The listing of the new LUNA tokens was supported by many centralized exchanges, including Binance, Huobi, and Kraken.
Prior to this, Binance CEO Changpeng Zhao disclosed the company's losses from investing in Terra. He also stated that the exchange did not make money on this, and has always prioritized the protection of users.
Following the collapse of the ecosystem, South Korean financial regulators held an emergency meeting to assess the impact of the incident. According to media reports, local authorities have begun checking employees of Terraform Labs as part of the investigation.
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In May, South Korea-based law firm LKB Partners, announced plans to sue Kwon. Later, in June, Bloomberg reported that the US Securities and Exchange Commission started an investigation related to UST.