In the midst of a crypto crash, cryptocurrency enthusiasts receive more bad news. The biggest crypto exchange Binance receives a class action lawsuit. Usually, when this kind of news surfaces in the crypto market, the token behind the project tends to crash. The exact same scenario happened to Ripple as it received a lawsuit from the SEC, XRP prices crashed heavily. Will BNB crash further because of the lawsuit? Is Binance safe as a crypto exchange? What happened to Binance?
What is Binance?
Binance is one of the world’s most popular cryptocurrency exchanges. Changpeng Zhao started this cryptocurrency exchange in Hong Kong in 2017. It offers users basic crypto trading tools across its platform, with around 1,000 cryptocurrencies supported, including BNB, the exchange’s native asset. Binance is well-known in the cryptocurrency community for its low transaction costs and quick services. The crypto exchange also pays users for trading and utilizing the platform’s own BNB currency. Aside from basic crypto trading, Binance also allows businesses to undertake initial coin offerings (ICOs) on its platform.
Why did Binance receive a lawsuit?
After the crash of the well-known crypto project Terra, LUNA and UST investors were left to dust. The Reddit forum of Terra was filled with angry investors and even with suicidal posts. Apparently, a group of investors decided to gather and jointly file a class-action lawsuit in North Carolina. They claimed that Binance misled Terra investors by marketing UST as a strong stablecoin. The lawsuit is also targeting Brian Shroder, the CEO of Binance US.
How did BNB Price react to the Binance Lawsuit?
BNB price is in a very risky situation. From one side, the cryptocurrency market as a whole is collapsing, losing more than $1 Trillion in valuation since the beginning of 2022. On the other side, Binance as a company gets slammed by a class-action lawsuit.
As a result, BNB prices crashed even lower than the support price of $270, and reached a current price of $220. From how things are looking, BNB is eyeing the next support price of $200, which is also another psychological price area.
What will happen to cryptos if Binance loses the lawsuit?
If Binance loses its battle over the lawsuit, there will definitely be another panic in the market, not only for BNB investors. In fact, every trader who uses Binance, or every DeFi project listed on Binance, using BSC or even ICO projects, are going to be shaken down further.
That’s why many analysts predicted that Terra’s downfall will have a bigger problem for other crypto projects. From other stablecoins like Tether, to crypto exchanges such as Binance…the bloodbath is continuing.
Will Binance win the lawsuit?
Binance is today a multinational company, registered in many countries around the world. They also have high managing directors that actively look into the well-being of the company. The lawsuit thrown by Terra investors will not pass easily. In fact, Binance managed to win many previous lawsuits, including the latest one from back in March 2022 when it won a similar lawsuit like Ripple’s.
The Judge will most likely check the marketing campaigns and online writings that Binance used to advertise for Terra (UST or LUNA) and see whether there was any sign of a pump or hype. If no material were found plausible, Binance is surely to win.
