Binance US Faces Court Action for the Sale of LUNA and TerraUSD

Key Insights:

• Binance was back in hot water today, with news of US investors filing a class action suit against Binance US for the sale of Terra LUNA and TerraUSD.
• The fallout from the collapse of Terra LUNA and TerraUSD is likely to impact several US crypto exchanges.
• The class-action suit coincided with a broad-based crypto market sell-off that saw Binance Coin (BNB) fall back to sub-$220.

Investors and crypto exchanges are in the midst of the crypto winter. Since hitting a November 8 all-time high of $694, Binance Coin (BNB) has tumbled by more than 68%.

While investor sentiment towards inflation, the economic outlook, and Fed monetary policy has contributed to the meltdown, regulatory uncertainty has added fuel to the fire.

In May, the collapse of TerraUSD (USTC) and Terra LUNA added further downward pressure. The dust has yet to settle from the collapse, with regulators and investors looking for answers.

This week, the world’s leading exchange Binance was back in hot water.

Investors File Class Action Suit Against Binance US

Today, an investor group filed a class action suit in the US District Court of Northern District of California claiming that Binance illegally sold unregistered securities UST and LUNA.

Roche Freedman and Dontzin Nagy & Fleissig filed the lawsuit on behalf of the investor group. The lawsuit also claims Binance US mislead investors into purchasing UST and LUNA.

Kyle Roche took to Twitter today, looking for other investors wishing to file claims against exchanges. Kyle Roche tweeted,

“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.”

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.

— Kyle Roche (@KyleWRoche) May 13, 2022

The latest class action filing follows news of the SEC investigating whether BNB was a security when sold in 2017.

Things are not much better for Coinbase and Gemini, who also face the prospect of class action suits.

Last week, news hit the wires of retirement investment company IRA Financial filing a lawsuit against Gemini Trust Company. This year, Coinbase has also faced class action suits, with investors claiming the exchange sold securities illegally.

Binance Coin (BNB) Price Action

At the time of writing, BNB was down 13.2% to $221.

A mixed start to the day saw BNB rise to an early morning high of $258 before falling to a low of $217.

BNB fell through the First Major Support Level at $246 and the Second Major Support Level at $238.

Finding support at the Third Major Support Level at $217, BNB partially recovered to $221 levels.

Technical Indicators

BNB will need to move through the Major Support Levels and the $259 pivot to target the First Major Resistance Level at $267.

BNB would need broader crypto market support to return to $250 levels.

Failure to move through the Major Support Levels and the pivot would bring the Third Major Support Level at $217 back into play. Barring another extended sell-off, BNB should avoid sub-$210 and the current year low of $207.

Looking at the EMAs and the 4-hourly candlestick chart (above), it is a bearish signal. BNB sits below the 50-day EMA, currently at $276. This morning, the 50-day EMA pulled back from the 100-day EMA. The 100-day EMA fell back from the 200-day EMA; BNB price negative.

A move back to $250 would bring the 50-day EMA into play.