Almost 1,700 UK investors sue Binance and Changpeng Zhao for 150 million British pounds over crypto derivatives

About 1,700 UK investors are reportedly suing Binance, its founder Changpeng Zhao, the Binance-affiliated Nest Exchange, and “persons unknown” for 150 million British pounds ($200 million), arguing that Binance offered crypto derivatives without the approvals required under UK law. For PSPs and high-risk payment teams, the point is straightforward: when a venue is still reachable by UK customers but lacks the right regulatory permissions, the payment stack can end up sitting in the middle of the dispute.

1. KP Law, which represents the investors, says Binance’s leverage tokens, futures contracts, and options breached the Financial Services and Markets Act 2000. The claim also says those products continued to be offered after the Financial Conduct Authority banned them from being offered to retail customers in January 2021.
2. The law firm said “there appeared to be no effective barrier preventing UK customers from accessing them.” Binance told Cointelegraph it would “defend against these claims through the appropriate legal process” and that it “remains committed to its obligations to users and to operating in accordance with applicable law.”
3. The lawsuit adds to Binance’s broader legal and regulatory problems. The exchange recently failed to secure a Markets in Crypto-Assets-compliant license from a European Union member state before the July 1 deadline, and it has also faced allegations that it facilitated $850 million in transactions tied to a sanctioned Iranian financier that flowed to Iran’s Islamic Revolutionary Guard Corps. Binance has strongly denied those allegations.
4. One named customer, 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, according to the Financial Times. Reuters also reported that multiple UK users lost “tens of thousands of pounds” through the products.
5. Binance’s UK operations became heavily restricted in June 2021, when the FCA informed Binance Markets Limited that it could not operate in the region without written consent. Reuters noted that the lawsuit was filed in the London High Court.

KP Law said it is still identifying the full scope of affected customers. It also noted that Binance is one of the world’s largest cryptocurrency exchanges, which is a polite way of saying the customer base may be large enough that this is not just a one-off legal headache.