Almost 1,700 UK investors are reportedly suing Binance and its founder Changpeng Zhao for 150 million British pounds ($200 million), alleging the crypto exchange offered and sold crypto derivatives without regulatory approval.
The law firm representing the investors, KP Law, said Binance’s leverage tokens, futures contracts and options offerings breached the Financial Services and Markets Act 2000 and that these products continued to be offered after the Financial Conduct Authority banned such products from being offered to retail customers in January 2021.
“There appeared to be no effective barrier preventing UK customers from accessing them,” the law firm said.
Binance told Cointelegraph it would “defend against these claims through the appropriate legal process” and it “remains committed to its obligations to users and to operating in accordance with applicable law.”
Source: Cointelegraph
The lawsuit adds to a growing list of legal and regulatory challenges for the crypto exchange, including recently failing to secure a Markets in Crypto-Assets-compliant license from a European Union member state before the July 1 deadline.
Binance has also been facing allegations that it facilitated $850 million in transactions tied to a sanctioned Iranian financier that flowed to Iran’s Islamic Revolutionary Guard Corps. The crypto exchange strongly denied the allegations.
Binance UK customers lost “tens of thousands of pounds”
One of the affected customers, Tomas Sutas, was a financial controller who allegedly invested more than 100,000 British pounds ($132,400) into Binance’s derivatives products before the value of his investments was wiped out, the Financial Times reported.
Reuters also reported that multiple UK users lost “tens of thousands of pounds” through the products.
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KP Law said it is still identifying the full scope of affected customers.
“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.”
Binance’s operations in the UK became heavily restricted in June 2021 when the FCA informed Binance Markets Limited that it couldn’t operate in the region without written consent.
Reuters noted that the lawsuit was filed in the London High Court.
The Binance-affiliated Nest Exchange and “persons unknown” were also named as defendants.
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