According to Reuters, approximately 1,700 UK investors have filed a class-action lawsuit against Binance and its founder Changpeng Zhao (CZ) at the High Court of London, seeking at least £150 million (approximately $200 million) in damages. The plaintiffs allege that since late 2019, the crypto exchange marketed and sold high-risk complex derivatives—including leveraged products and futures contracts—to retail investors without authorization from the Financial Conduct Authority (FCA), violating the Financial Services and Markets Act. Some investors reported losing tens of thousands of pounds. A Binance spokesperson stated the company will vigorously defend its position but declined to comment further on the pending litigation.
Core Allegations and Legal Basis
The plaintiffs' primary claim is that Binance promoted margin trading, perpetual swaps, and other leveraged derivatives to UK retail customers without holding the necessary FCA authorization. Such products carry significant risk due to high leverage, which far exceeds the risk profile of spot trading. Under UK law, offering these financial instruments to retail investors requires either a regulated license or an exemption—Binance lacked both during the 2019–2021 period. The FCA had explicitly banned crypto firms from providing retail derivatives starting January 2021, but the plaintiffs argue Binance operated the business from 2019, characterizing it as a systematic violation.
The lawsuit cites multiple specific cases where investors lost their entire principal due to high-leverage positions. The £150 million claim covers principal losses, interest, and potentially punitive damages. The case has entered formal proceedings at the High Court and is expected to take several years to resolve.
Regulatory Challenges and Industry Impact
This litigation adds to Binance's mounting regulatory pressures globally. After the FCA's 2021 ban, Binance took steps such as halting new UK user registrations and stopping pound sterling deposits, but the plaintiffs argue these measures did not address illegal sales between 2019 and 2021. Binance's primary regulatory license is held in the UAE, and its European efforts have faced setbacks—most recently, its license application in Greece failed this month, marking another obstacle to EU expansion.
From an industry perspective, this case could become a landmark for crypto derivatives regulation. If the court rules in favor of investors, it would force all crypto exchanges operating in the UK to reassess product compliance and could spur the FCA to strengthen cross-border enforcement against offshore exchanges. Moreover, class-action mechanisms have become increasingly active in the UK, potentially prompting similar lawsuits against other exchanges. Market participants should closely monitor case developments to gauge risk exposure and compliance costs.