In brief
- Changpeng “CZ” Zhao and Binance were named in a lawsuit seeking nearly $200 million in the U.K.
- The suit alleges the firm offered risky financial products without appropriate regulatory approval.
- Nearly 1,700 British investors were listed as claimants.
Global crypto exchange Binance and its founder Changpeng “CZ” Zhao have both been named in a U.K. lawsuit seeking nearly $200 million (£150 million), according to a report from Reuters.
The lawsuit alleges that the firm offered complex and risky financial instruments, like leveraged trading products, without regulatory approval. The suit includes nearly 1,700 claimants, according to the report, some which lost tens of thousands of dollars when the offerings were available in late 2019.
“We do not comment on ongoing litigation,” a Binance spokesperson told Decrypt. “We will defend against these claims through the appropriate legal process in due course. Binance remains committed to its obligations to users and to operating in accordance with applicable law.”
Though the claimants had access to the derivative products in late 2019, the U.K. Financial Conduct Authority (FCA) announced a ban on crypto derivatives for retail customers in October 2020, considering the more advanced trading products “ill-suited” to retail customers.
That ban went into effect in January 2021. An overview of the regulator’s crypto policy published on Tuesday highlighted that it recently lifted the ban on retail access to select exchange traded notes (ETNs), but is still reviewing its position regarding retail access to derivatives.
“Cryptoassets are high risk investments and will remain high risk under our regime,” the regulator wrote.
Binance, the leading crypto exchange by trading volume, is dealing with other troubles in Europe, as well. Last week, the firm formally withdrew its Markets in Crypto Assets (MicA) application from Greece, a week after Reuters reported that the application would be denied.
A MiCA license would provide the firm with the regulatory approval necessary to offer crypto services to users in the nations in the E.U. beginning July 1. Without a license, Binance will be unable to do so. After withdrawing from Greece, Binance said it would apply via a different E.U. member nation, though it has not indicated which.
Editor’s note: This story was updated after publication to include comment from Binance.
