last month Terra ecosystem saw its value plummeting almost to nil. Now, a U.S.-based law firm has filed a class-action lawsuit against Binance.US for misleading investors over Terra.
Roche Freedman LLP has filed a lawsuit alleging that Binance.US marketed Terra with its dollar-based UST as more stable than it actually is. Moreover, the suit claims that its sister token LUNAC (Luna Classic) crashed to zero last month, resulting in losses for thousands of investors. In fact, LUNAC and UST essentially wiped out $40 billion worth of investors’ funds in a matter of weeks.
Moving on, the lawsuit alleged that Binance.US is not registered as a broker-deal or an exchange. This is in violation of the securities law since it listed unregistered security in UST.
If the suit is successful in its lawsuit against Binance, there is going to be trouble for some DeFi founders and CEXs. On the other hand, this could be a big step in defining the legal status of DeFi in the United States. As of now, DeFi has avoided clear regulations or heavy government oversight, unlike in other regions.
Looking at the current lawsuit that Binance.US is facing, this could have pretty big implications for DeFi in the future. In fact, this could essentially force crypto exchanges to have thorough checks of the cryptocurrencies they are listing on their platform. This may cost some trouble for them but could be a beneficial proposition for investors who can have a sigh of relief with this added scrutiny.