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UK lawsuit targets Binance
Binance and its founder Changpeng “CZ” Zhao were named in a U.K. lawsuit seeking nearly $200 million (£150 million) in the London High Court, according to Reuters and as described by Decrypt.
“Binance and Changpeng Zhao face claim from 1,700 UK investors over risky derivatives London High Court lawsuit alleges the exchange sold leveraged crypto derivatives to UK retail traders without FCA authorization, seeking at least £150 million in damages Nearly 1,700 UK investors have filed a lawsuit against Binance in the London High Court, alleging the exchange sold them high-risk leveraged derivative products without ever obtaining approval from Britain’s financial regulator”
The claim alleges Binance offered complex and risky financial instruments, including leveraged trading products, without regulatory approval, and it lists nearly 1,700 British investors as claimants.
The Decrypt report says the suit includes nearly 1,700 claimants and that some claimants lost tens of thousands of dollars when the offerings were available in late 2019.
Decrypt also notes that the U.K. Financial Conduct Authority (FCA) announced a ban on crypto derivatives for retail customers in October 2020, with the ban going into effect in January 2021.
FCA ban and Binance response
The Crypto Briefing account says the High Court action names Binance Holdings Ltd, based in the Cayman Islands, alongside UAE-registered entity Nest Exchange, founder Changpeng Zhao (commonly known as CZ), and unnamed individuals.
It says the claimants argue selling leveraged crypto derivatives to UK retail customers without FCA authorization violates the Financial Services and Markets Act, and it adds that some claimants report losing tens of thousands of pounds.
Binance’s spokesperson response is quoted in multiple outlets, including the statement that "Binance remains committed to its obligations to users and to operating in accordance with applicable law."
Decrypt adds that the firm told Reuters it would defend itself against the suit, while also describing the FCA’s position that "Cryptoassets are high risk investments and will remain high risk under our regime."
Broader regulatory pressure
Beyond the UK case, Decrypt says Binance withdrew its Markets in Crypto Assets (MicA) application from Greece after Reuters reported the application would be denied, and it says a MiCA license would provide regulatory approval necessary to offer crypto services in the nations in the E.U. beginning July 1.
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Decrypt reports that without a license, Binance will be unable to do so, and it says that after withdrawing from Greece, Binance said it would apply via a different E.U. member nation without indicating which.
The Crypto Briefing report frames the UK lawsuit as adding another front to what it calls a multi-theater regulatory battle, and it notes that CZ pleaded guilty to federal charges related to anti-money laundering violations in late 2023.
It further states that CZ served a four-month prison sentence and stepped down as CEO, and that he has since been replaced by Richard Teng.
