Nearly 1,700 UK investors have sued Binance and founder Changpeng Zhao in London over alleged losses tied to crypto derivatives.
Summary
- Nearly 1,700 UK investors accuse Binance and CZ of selling unauthorized crypto derivative products.
- The claim targets futures, options and leveraged tokens allegedly offered before and after FCA restrictions.
- Binance says it will defend itself while facing wider regulatory pressure in Europe and beyond.
Almost 1,700 British investors are seeking at least £150 million, or about $200 million, from Binance and Changpeng Zhao, according to Reuters. The case was filed in London’s High Court and names Binance Holdings, UAE-registered Nest Exchange, Zhao and “persons unknown” linked to the Binance trading platform.
The claimants allege Binance sold risky and complex crypto derivative products without the needed regulatory authorization. They say the products included leveraged tokens, futures contracts and options, which can raise gains but also deepen losses when markets move against traders.
Claim centers on crypto derivatives
The investors allege Binance promoted and made the products available to UK customers from late 2019. The claim says Binance breached the Financial Services and Markets Act by offering regulated products without approval.
KP Law, which is handling the group action, says UK consumers may be eligible if they traded Binance leveraged tokens, futures contracts or options. The law firm says the claim does not cover spot crypto trading losses.
FCA ban frames the dispute
The UK Financial Conduct Authority banned the sale, marketing and distribution of crypto derivatives and crypto exchange-traded notes to retail consumers from Jan. 6, 2021. The FCA said these products were ill-suited for retail buyers because of price volatility, valuation problems and the risk of sudden losses.
The lawsuit claims Binance continued to offer some products to UK consumers after the FCA ban took effect. Binance later took steps to limit UK access and required users to provide extra information.
“Binance remains committed to its obligations to users and to operating in accordance with applicable law,” a Binance spokesperson said. The exchange said it would defend itself but declined to comment further on active litigation, according to Reuters.
Wider pressure on Binance grows
The London claim adds to Binance’s legal and regulatory challenges in several markets.Last week, Binance planned to stay in Europe after its attempt to secure a license in Greece unraveled before the June 30 deadline under the European Union’s crypto regime.
Meanwhile, the FCA recently warned that Hyperliquid and Hyper Foundation may be offering or promoting financial services in the UK without authorization. That warning came as crypto perpetual futures and other leveraged products drew more attention from regulators.
As reported earlier by crypto.news, Binance Australia Derivatives also faced action from the Australian Securities and Investments Commission over claims that retail clients were misclassified. That case, like the UK claim, focuses on how exchanges treat retail users when offering higher-risk crypto products.
The UK case will test how far investors can use existing financial services law to seek compensation for past crypto trading losses. Binance denies wrongdoing and says it will defend the claim through the courts.
