British investor sues Binance and former CEO Zhao Changpeng for $200 million

Binance has said it will fight the allegations in court, but did not provide details.

1,700 British investors have filed a class action lawsuit against Binance and its founder Zhao Changpeng at the London High Court.

Plaintiffs allege that the two sold high-risk crypto derivative products to retail investors without permission.

UK investor demands $200 million from Binance

The plaintiffs allege that from late 2019 to 2020, Binance offered products such as leveraged tokens, options, contracts and futures without approval from the UK’s Financial Conduct Authority (FCA).

The victims filed a lawsuit under the Financial Services and Markets Act, arguing that derivatives constitute a “special investment” under the regulations. British regulators banned Binance from selling these complex investment products in 2021, but the exchange continued to sell them to users.

Cryptocurrency traders also accuse them of promoting their products through advertising campaigns, online materials, social media posts, and email communications.

Hannah Sharp, a partner at the law firm representing the victims, said her clients had suffered significant financial losses and was determined to hold CZ and the exchange accountable.

The Financial Times reported that traders lost tens of thousands of dollars, and in some cases millions of dollars. Plaintiffs are currently seeking approximately $200 million in damages.

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Binance admits lawsuit

Binance has not yet responded to the lawsuit’s accusations, but acknowledged that it is aware of the proceedings.

“We do not comment on ongoing litigation. We will defend these claims through appropriate legal processes,” the company said in a statement.

The lawsuit adds to the list of legal and regulatory challenges the company has faced in recent years, including its recent failure to secure an EU crypto license.

Following the setback, Binance initially informed customers that it would cease offering services in the region. However, CZ has since stressed that it is continuing its commitment to Europe and plans to apply for permits through other jurisdictions.

This comes after the European Securities and Markets Authority (ESMA) ordered all unlicensed digital asset companies to wind down their operations by July 1 if they fail to obtain a MiCA license by the deadline. Meanwhile, crypto industry executives say the directive is expected to affect more than 80% of crypto platforms in the region.

British regulators have long been known for their caution, warning users that cryptocurrencies are risky investments. The FCA recently published long-awaited regulations in this area. The rules require companies to meet financial security standards, comply with anti-money laundering and market abuse laws and meet consumer protection requirements.