Latest Binance Lawsuit Is Every Crypto-Exchange User’s Nightmare
On March 30, the Block broke the news
that Binance is involved in yet another legal dispute. This time, the lawsuit was filed by a former employee, Steven Cody Reynolds, who accuses the exchange of confiscating nearly $300k in crypto following a heated disagreement.
The claims paint a disturbing picture:
One of a CZ as a manipulative employer who used Binance to illegally seize hundreds of thousands in cryptocurrency when he did not get his way.
It all started when Binance hired Steve Cody Reynolds, a cryptocurrency investor and consultant, to provided customer support to English speaking users of the exchange. He worked for Binance from July 2017, to December 2017 and was compensated for his services in the form of Binance Coins, which Reynolds stored in his already-existing Binance account.
When Reynolds decided to leave Binance in December, he parted with the exchange on good terms and continued to use Binance to trade and store his coins.
Several weeks later, Binance contacted Reynolds and asked him to delete a group chat he had made on Telegram Messenger which he had been using to communicate with Binance users. However, the app setting on Telegram do not allow public chats to be deleted, so Binance requested that he remove references to the exchange in the chats name, to which he immediately complied.
Then things began to turn ugly. According to the lawsuit
, that very day Changpeng Zhao contacted Reynolds himself, demanding he removed all the participants in the chat. When Reynolds resisted, he was “threated by Zhao with legal and financial damages unless he complied.”
Within minutes, CZ’s exchange had followed through with this threat, lowering Reynolds withdrawal limit of his Binance account to zero, then locking him out of his account entirely. Despite attempting to contact customer service, Reynolds was left locked away from his funds which, at the time, were worth $284,000.
Imagine his shock when, months later Reynolds regained access only to discover that his account balance was zero.
Binance reacted to the claims by insisting that the Telegram group was Binance property, and that Reynolds misappropriated the chat group, a response that avoided addressing the seizing of funds.
Reynolds’ accusations against Binance are a wakeup call to those who use crypto exchange platforms to store their funds. Crypto users trust these exchanges to act as an impartial platform that help navigate the crypto sphere.
However, when all’s said and done, they are centralized platforms that are ultimately controlled by humans, thus vulnerable to human error and human emotions.
If these claims even contain an element of truth, it shows that CZ can and does use his exchange as a tool to enact his will, lifting the veil on the frightening power in the hands of those running centralized exchanges a realization that will likely shake the trust of crypto users worldwide.
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