Class-action suit filed against Binance for alleged harm to FTX before its collapse
A class-action suit was filed against Binance.US and Binance CEO Changpeng Zhao on Oct. 2 in the District Court of Northern California alleging various violations of federal and California law on unfair competition for attempting to monopolize the cryptocurrency market by harming its competitor FTX. The suit was brought by Nir Lahav, who is identified only as a California resident.
At issue are posts made by Zhao on Twitter (now X) in early November on the eve of FTX’s collapse. The posts were made in conjunction with the decision by the defendants to liquidate their holdings in the FTX utility token FTT on Nov. 6. The plaintiffs estimated that Binance owned up to 5% of all FTT tokens.
The following day, Zhao stated in a Twitter post that Binance had signed a letter of intent to acquire FTX, but it backed out of that deal one day later. According to the suit:
“Zhao publicly disseminated this information [on the withdrawal of the acquisition offer] on twitter and other social media platforms to hurt FTX Entities that ultimately lead to a rushed and unprecedented collapse of FTX Entities.”
After began its argumentation with a defense of the Securities and Exchange Commission’s (SEC) policies on crypto and invocation of the Supreme Court’s Howey and Reves decisions, among others.
As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4
— CZ Binance (@cz_binance) November 6, 2022
It went on to claim that Zhao’s Nov. 6 tweet, “Due to recent revelations that have came [sic] to light, we have decided to liquidate any remaining FTT on our books,” was false and misleading, since Binance has already sold its FTT holdings, and the post was “intended to cause the price of FTT in the market to decline.”
Related: New FTX documentary to spotlight SBF-CZ relationship
The plaintiffs found evidence for their claim in the same post by Zhao, where he wrote, “We are not against anyone. […] But we won’t support people who lobby against other industry players behind their backs.” The plaintiffs took the latter sentence to indicate that Binance opposed FTX CEO Sam Bankman-Fried’s “regulatory efforts.”
Sad day. Tried, but
— CZ Binance (@cz_binance) November 9, 2022
The suit alleges that Zhao’s proposal to acquire FTX was not made in good faith and the episode would “ultimately lead” to the collapse of FTX:
“Zhao’s tweet resulted in FTT price declining from US 23.1510 to US 3.1468. This significant drop plummeted FTX Entities into bankruptcy without giving an opportunity or chance to FTX Entities’ executives and board of directors a chance [sic] to salvage the situation and put in safe guards to protect its clients and end-users.”
The suit demanded monetary damages, court costs and disgorgement of ill-gotten gains based on seven counts. “Plaintiff believes that there are thousands of members of the proposed class,” the suit stated.
CZ just executed the most gangster play we’ve seen in Crypto, ever, period. The BALLS on this man. Truly — bravo.
Also bravo to Sam to choose the correct option that protects customer assets, swallow his pride, and not burn everything down in an unnecessary fight.
WHAT A SHOW!
— Autism Capital (@AutismCapital) November 8, 2022
As the suit noted, both Binance and FTX are currently subject to SEC actions. The criminal case against Bankman-Fried will begin Oct. 4 in New York. Zhao addressed potential accusations of unfair competition in the same tweet that is cited in the suit. “Regarding any speculation as to whether this is a move against a competitor, it is not,” he wrote.
His statement did not stop speculation to that effect within the crypto community, however. The CEOs of the crypto exchanges traded jibes on then-Twitter for weeks afterward.
South Korea’s National Tax Service warned that cold wallets are not beyond its reach, as it will conduct home searches to combat tax evasion.
The World Transformed, a left-wing political festival, has historically ran alongside the Labour Party Conference as an unofficial fringe event.
But a lot has changed since it began in 2016, organised then by the Corbyn-backed group Momentum. And like the former Labour leader himself, TWT has gone independent.
From Thursday to Sunday, a programme of politics, arts and cultural events will be held in Manchester, a week after Labour’s annual party gathering ended.
“It no longer made any sense to be a fringe festival of the Labour conference,” Hope Worsdale, an organiser since 2018, tells Sky News. “We need a space for the independent left to come together.”
This decision was made before the formation of Your Party in July and the surge of support behind the Greens and its new leader Zack Polanski, but both these factors have given TWT some extra momentum. Organisers say it is not just a festival, but a “statement of intent from the British left” – and a left that looks different from how it used to.
Previous headline speakers were Labour MPs in the left-wing Socialist Campaign Group, and in 2021, the showstopper was American democrat Bernie Sanders calling in live for an event alongside John McDonnell.
The World Transformed, previously headlined left-wing Labour MPs
Bernie Sanders and John McDonnell in conversation at TWT in 2021
This year, Mr Polanski, Jeremy Corbyn and Zarah Sultana are the only British politicians due to speak at events – though Brian Leishman, who lost the Labour whip in the summer, is also scheduled on a panel.
TWT was put on pause last year for organisers to reflect upon its role going forward, after Sir Keir Starmer’s election victory.
In 2021, 2022 and 2023, while he was leader of the opposition, the festival was able to “co-exist” with Labour as a space for activists on the left to discuss ideas.
But the prime minister’s “shift to the right” has alienated so many of those grassroots members that it was felt TWT’s core audience would no longer be at Labour Party conferences, says Hope, who joined Labour in the Corbyn years and has since left.
TWT in 2016. Pic: TWT
Event at TWT in 2023
“Our official position isn’t that Labour is dead and no one should engage with it,” she says.
“But they have shifted the values of Labour so radically since the last election, broken promise after promise, attacked civil liberties… there’s been such a suite of terrible decisions that mean people who are generally progressive and generally left wing feel like they have to take their organising elsewhere.”
So what’s on the cards?
There will be 120 events held in Hulme, Manchester, from Thursday to Sunday evening.
At the heart of the programme is daily assemblies, which organisers say are “designed to hold genuinely constructive debates about what we should do and how we should do it”.
But there’s just as much partying as there is politics – Dele Sosimi and his Afrobeat Orchestra are headlining the Saturday night slot while a “mystery guest” will host what TWT calls its “infamous” pub quiz on Friday night.
Back in 2018 that was Ed Miliband’s job, when 10,000 activists were expected to attend TWT. This year, organisers anticipate around 3,000 people will gather, but those involved insist this is a real chance for the left to strategise and co-ordinate, given the involvement of over 75 grassroots groups, trade unions, and activist networks.
Collaboration ‘vital’
A key question the left will need to address is how it can avoid splitting the vote given the rise of the Greens, socialist independents and the formation of Your Party,
One activist from the We Deserve Better organisation, which is campaigning for a left-wing electoral alliance and will be at TWT this weekend, acknowledged collaboration is “vital” if the left is to make gains under Britain’s first-past-the-post system.
Jeremy Corbyn at TWT. Pic: Reuters
But it remains to be seen whether Your Party co-leaders Mr Corbyn and Ms Sultana can even work together following their public spat last month, let alone with other parties. The pair put on a united front at a rally in Liverpool on the eve of TWT, when Sultana said she was “truly sorry” and promised “no more of that”. But will the truce last?
“It’s not ideal”, says the activist. “Hopefully they are back on track…a lot of collaboration is happening at the grassroots and we need to make sure it’s formalised so we can beat Labour and the right, we need to put on united front.”
They point to seats like Ilford North, where Health Secretary Wes Streeting clung on by a margin of just 528 votes in the general election, after a challenge from British-Palestinian candidate Leanne Mohamad, who ran in protest against Labour’s stance on Gaza.
Meanwhile, in Hackney, the Greens are hoping to gain their first directly elected mayor next May, with the Hackney Independent Socialist Group of councillors throwing their weight behind the party’s candidate, Zoe Garbett.
The We Deserve Better activist says Labour’s “hostile war on the left” has made these areas ripe for the taking, and what is more important than party affiliation is galvanising momentum behind one candidate who shares socialist values on issues like public ownership and immigration – be they the Greens, independents, or Your Party.
“The World Transformed reflects a general reorientation of the left outside of Labour. If they are taking these places for granted, we are going to win. If we unite as the left then we can win even bigger. Bring it on.”
Is Labour in danger?
There is some cause for Labour to be worried. It is haemorrhaging votes to both the right and the left after a tumultuous first year in office (13% to Reform UK, 10% to the Greens and 10% to the Lib Dems, according to an Ipsos poll in September).
Many Labour MPs feel the prime minister has spent too much energy trying to “out Reform Reform” with a focus on immigration, and he needs to do more to win back moderate and progressive voters that will be gathering at TWT this weekend.
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Starmer’s ‘anti-Reform party’ gamble
One fed-up MP told Sky News it was a shame TWT had decided to branch away from Labour, but not a surprise.
“This was something that was on the cards for a while, a parting of the ways, it’s another thing to show what’s happening with the direction of the party.”
He said in previous years the festival “was full of people for the first time in their life who were excited about politics and had a leadership looking at how it could challenge the biggest issues in our country”.
“Debates could be heated but it was always a place for intellectual discussion and that inside the Labour Party is now dead.”
But he said the party ultimately had bigger things to worry about than TWT, with a budget round the corner and potentially catastrophic local elections in May.
“I don’t think it will keep Keir Starmer or Morgan McSweeney up at night.”
The Irish Communications Interception and Lawful Access Bill is still in development, with drafting yet to occur, but the Global Encryption Coalition wants it scrapped now.
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