- Almost 1,700 UK crypto investors are suing Binance and Changpeng Zhao for almost £150 million over unlawful crypto derivatives.
- The claim states that Binance made available unregulated leveraged crypto derivatives contrary to financial laws in the UK.
Nearly 1,700 UK cryptocurrency investors have taken legal action in the UK High Court against Binance and its co-founder, Changpeng Zhao, in a lawsuit worth more than £150 million, or roughly $200 million. The claimants’ law firm, KP Law, contends that Binance made available unregulated leveraged tokens, futures, and options to UK investors without getting the regulatory authorization under the Financial Services and Markets Act 2000.
The lawsuit makes Binance Holdings, Nest Exchange, Changpeng Zhao and other unnamed platform operators as respondents. As per the suit, Binance advertised leveraged crypto derivatives to UK investors since 2019 and continued doing so even after the ban on crypto derivatives for retail customers by the Financial Conduct Authority in January 2021. In addition, KP Law has contended that Binance did not take necessary measures to stop UK citizens from accessing these cryptocurrency derivatives.
Investors Claimed Significant Losses and Regulatory Violations
Some investors incurred financial losses after investing in Binance’s leveraged crypto products before regulatory bans affected its operations. Additionally, Reuters has cited several cases where some UK customers have lost many thousands of pounds while trading Binance’s leveraged cryptocurrency products. KP Law is still looking for other investors who were adversely affected by Binance since it used to serve millions of cryptocurrency traders from different corners of the globe. It means that, if the courts find the claim to be true, then the unauthorized financial contracts can become unenforceable under the current UK financial regulations.
More Regulatory Scrutiny for Binance
According to Binance, it will continue to uphold the accusations in court and will comply with all necessary regulations and laws. At this time, the company is not making any comments since the matter is currently being deliberated in the London High Court.
The lawsuit comes at a time when EU nations are conducting increased regulatory scrutiny of Binance due to challenges the exchange is facing in obtaining MiCA approval. Recently, the British government concluded an exhaustive cryptocurrency regulation framework and imposed the need for licensing by exchanges and digital asset companies.
This lawsuit marks another big legal hurdle for Binance, with regulatory bodies stepping up their regulation in key cryptocurrency markets. The court proceedings may impact the process of enforcing regulatory compliance for cryptocurrency investment products that lack necessary authorization.
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