Binance and CEO Changpeng Zhao are facing a $200 million lawsuit from UK investors over unapproved high-risk financial products.
Binance Faces Major Lawsuit in the UK
Binance, the leading cryptocurrency exchange, along with its CEO Changpeng "CZ" Zhao, is embroiled in a substantial legal battle in the United Kingdom, with a lawsuit seeking nearly $200 million (£150 million) from approximately 1,700 investors.
The lawsuit alleges that the exchange provided high-risk financial products, such as leveraged trading options, without obtaining the necessary regulatory approvals. Many claimants reported significant financial losses from these products, which were accessible in late 2019.
A Binance spokesperson stated, "Binance remains committed to its obligations to users and to operating in accordance with applicable law," affirming the company’s intention to contest the claims made against them. However, a request for further comment from Binance went unanswered by a representative.
While the claimants engaged with these derivative products before a ban was imposed by the U.K. Financial Conduct Authority (FCA) in October 2020—deeming them unsuitable for retail investors—the FCA has since lifted restrictions on certain exchange-traded notes (ETNs) but maintains scrutiny over retail access to derivatives, highlighting the inherent risks associated with cryptoassets.
In addition to the lawsuit, Binance is facing regulatory hurdles in Europe. The exchange recently withdrew its application for a Markets in Crypto Assets (MiCA) license in Greece, where it was anticipated that the application would not be approved. This license is essential for Binance to legally offer crypto services within the EU starting July 1. Following the withdrawal from Greece, Binance has signaled plans to seek a MiCA license through an alternative EU member state, although specific details are yet to be disclosed.
