A group of law firms led by Adam Moskowitz filed a lawsuit on behalf of “hundreds of thousands of victims” against Binance, CEO CZ and celebrities promoting the exchange in Florida, including NBA Miami Heat star Jimmy Butler.
Moskowitz is also embroiled in class-action lawsuits against FTX and Voyager Digital. Moskovitz’s lawsuit is based on the Blue Sky Act, an umbrella term for securities laws enacted by states in the U.S. to regulate the trading of securities in a territory and the registration of stockbrokers and investment advisers.
According to Moskowitz, Binance, FTX, Voyager Digital, and associated individuals “all allegedly sold and promoted unregistered securities.” Because cryptocurrencies are not traded on national stock exchanges, the asset class could be subject to state regulation, opening the door to more unregistered securities lawsuits, legal experts said.
The lawsuits against Binance, FTX and Voyager Digital are just the latest in a series of legal challenges against cryptocurrency exchanges. The lawsuits seek to hold the exchange accountable for allegedly selling unregistered securities to unsuspecting investors.
In response, the exchange argued that cryptocurrencies are not securities and therefore not subject to the same regulatory oversight as traditional securities. However, the U.S. Securities and Exchange Commission (SEC) position is that certain cryptocurrencies may be considered securities and therefore subject to the same regulation as traditional securities.
The lawsuits against Binance, FTX and Voyager Digital come at a time when sentiment in the cryptocurrency market is surging. Many investors are looking to capitalize on the potential of this new asset class, but with that potential comes risks.
Without proper regulatory oversight, some investors may be vulnerable to fraudulent activity or other forms of wrongdoing. The lawsuits against the exchanges seek to hold them accountable for any harm done to investors.
The question of whether cryptocurrencies are securities is a complex one, and one that has not been fully resolved. At the same time, investors should exercise caution and conduct due diligence before investing in any cryptocurrency or other digital assets.