A class-action lawsuit was filed today against Binance.US, alleging that the cryptocurrency exchange misled consumers about the safety of Terra’s stablecoin UST, and native token LUNA.

The suit also claims Binance violated federal law both by selling UST and LUNA, cryptocurrencies that the plaintiffs claim are securities that should have been registered with the SEC, and by operating as an unregistered securities exchange. 

Filed this morning in the U.S. District Court for the District of Northern California, the class action marks the first major attempt to utilize the American court system to rectify the damage caused by the spectacular collapse of UST and LUNA early last month, which wiped out some $40 billion in value. 

The plaintiffs cites Binance advertisements that, in the months preceding UST’s crash, touted the stablecoin as “safe” and “fiat-backed,” claims which the plaintiff’s attorneys argue are demonstrably false.

UST is an algorithmic stablecoin that, unlike other stablecoins backed by real-world assets, relied solely on an algorithmic relationship with Terra’s native token, LUNA, for stability. 

As designed, a mechanism was created to always permit the exchange of 1 UST for 1 LUNA should UST falter from its peg to the value of the U.S. dollar. This setup was meant to…

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