Lawsuit Overview: 1700 Investors Take Legal Action Against Binance and CZ
Nearly 1700 UK investors have launched a collective lawsuit at the High Court of London against Binance, the world's largest cryptocurrency exchange, and its founder Changpeng Zhao (CZ). The claimants are seeking at least £150 million (approximately $200 million) in damages. According to reports from Reuters, the plaintiffs allege that since late 2019, Binance entities offered high-risk and complex crypto derivatives—including leveraged products—to UK retail investors without obtaining the necessary authorization from UK financial regulators. They further claim that Binance violated the UK Financial Services and Markets Act by promoting these products.
Allegations: Unauthorized Sale of Derivatives Causing Heavy Losses
The legal team representing the investors argues that Binance systematically circumvented UK regulations by using multiple offshore entities, including Binance Holdings (incorporated in the Cayman Islands) and Nest Exchange (registered in the UAE), along with CZ himself and other unknown operators, to market and sell crypto derivatives to retail users. Some claimants assert that they suffered losses amounting to tens of thousands of pounds. These derivatives, such as high-leverage futures contracts, carry extremely high risk, and under UK law, such products are prohibited from being sold to retail investors.
Binance's Response and Regulatory Context: FCA Ban Since 2021
Binance's spokesperson declined to comment on the specifics of the ongoing litigation but stated that the company will vigorously defend itself and emphasized Binance's continued commitment to fulfilling its obligations to users and operating within applicable legal frameworks. Background information shows that the UK Financial Conduct Authority (FCA) had already banned crypto firms from offering derivatives to retail customers in 2021. Binance's UK subsidiary was also warned by the FCA that same year not to engage in regulated activities. The scale and historical significance of this lawsuit could have far-reaching implications for the global regulatory landscape of crypto derivatives.