A class action lawsuit has been filed against Binance.US, the American affiliate of global crypto exchange Binance, over the sale of luna and TerraUSD (UST) to buyers in the US.
Filed in the Northern District of California on Monday, the lawsuit alleges that Binance.US sold unregistered securities to the plaintiffs, misleading them in the process.
It also says that Binance.US's business model is "premised on illegally enabling the sale of unregistered securities to as many US investors as possible, as often as possible."
In conjunction with this, the plaintiffs allege that Binance.US promoted the sale of UST and participated in airdrops of tokens which were "designed to increase trading volume."
The 72-page complaint goes on to allege that Binance.US listed and sold UST despite the fact it is not registered as a broker-dealer, which, it says, is a violation of US securities laws.
The Block contacted Binance.US for comment but had not heard back before press time.
The move comes following the death spiral of UST, Terra's algorithmic stablecoin, which erased more than $40 billion in value from the market almost overnight. Terraform Labs CEO Do Kwon has since tried to make amends for lost funds, by airdropping luna 2.0 to holders.
The plaintiffs of this law suit have demanded a trial by jury for all issues deemed trialable.
This lawsuit, which is being brought by law firms Roche Freedman and Dontzin Nagy & Fleissig, could be the first of a number of legal complaints triggered by the breakdown of UST in May. If successful, it could also go some way to doing what governments have been thus far unable to do: put more clear parameters around the legal status of centralized finance (DeFi) and who is culpable when something goes wrong.
A named partner at the law firm Roche Freedman, Kyle Roche, tweeted on May 13: "If you purchased $LUNA or $UST on either @coinbase @krakenfx @binance or @Gemini, please reach out to TerraRecovery@rochefreedman.com . My firm is coordinating an effort to help those who lost funds from the recent collapse of #terra and #luna."