Binance and Changpeng Zhao Face $200M Lawsuit from British Crypto Traders
A group of approximately 1,700 investors from Britain have initiated legal action against cryptocurrency exchange Binance and its founder, claiming they provided prohibited crypto derivatives products during 2021.
Approximately 1,700 investors from the United Kingdom have reportedly initiated legal proceedings against Binance and its founder Changpeng Zhao, seeking damages totaling 150 million British pounds ($200 million). The claimants allege that the cryptocurrency exchange provided and marketed crypto derivatives products without obtaining the necessary regulatory authorization.
According to KP Law, the legal firm representing the group of investors, Binance's offerings including leverage tokens, futures contracts and options violated the Financial Services and Markets Act 2000. The firm further stated that these financial products remained available to customers even after the Financial Conduct Authority implemented a prohibition on such offerings to retail customers in January 2021.
There appeared to be no effective barrier preventing UK customers from accessing them
KP Law
In a statement to Cointelegraph, Binance indicated it would "defend against these claims through the appropriate legal process" and emphasized that it "remains committed to its obligations to users and to operating in accordance with applicable law."
This legal action contributes to an expanding series of legal and regulatory difficulties facing the cryptocurrency exchange, which includes the recent failure to obtain a Markets in Crypto-Assets-compliant license from any European Union member state prior to the July 1 deadline.
Additionally, Binance has been confronting accusations that it enabled $850 million in transactions connected to a sanctioned Iranian financier, with funds ultimately reaching Iran's Islamic Revolutionary Guard Corps. The cryptocurrency exchange has vigorously rejected these accusations.
Binance UK customers lost "tens of thousands of pounds"
Among the affected investors, Tomas Sutas, who worked as a financial controller, reportedly put more than 100,000 British pounds ($132,400) into Binance's derivatives offerings before experiencing a complete loss of his investment's value, according to a report by the Financial Times.
Additionally, Reuters documented that several UK users suffered losses of "tens of thousands of pounds" as a result of these products.
According to KP Law, the firm continues to determine the complete extent of customers who have been impacted.
While the precise number of UK customers affected is not publicly known, Binance is one of the world's largest cryptocurrency exchanges, meaning that a substantial number of users could potentially have been exposed to these issues.
KP Law
The operations of Binance in the United Kingdom faced significant limitations in June 2021 after the FCA notified Binance Markets Limited that conducting operations in the region would require written consent from the regulator.
According to Reuters, the legal action was submitted to the London High Court.
The defendants named in the lawsuit also include the Binance-affiliated Nest Exchange along with "persons unknown."