Binance Gets Served a £150M British Tea ☕

Binance and its founder Changpeng "CZ" Zhao are facing a U.K. lawsuit seeking nearly $200 million (£150 million) from almost 1,700 claimants who allege the exchange offered leveraged trading products without regulatory approval. The claim, reported by Reuters, focuses on derivative offerings available to retail customers in late 2019, with some investors saying they lost tens of thousands of dollars. "Binance remains committed to its obligations to users and to operating in accordance with applicable law," a spokesperson for the firm told Reuters, adding that it would defend itself against the suit. A representative for the exchange did not immediately respond to Decrypt's request for comment.

The claims cover a period before the U.K. Financial Conduct Authority announced a ban on crypto derivatives for retail customers in October 2020, calling the products "ill-suited" to that audience. That ban went into effect in January 2021. A policy overview published on Tuesday noted the regulator recently lifted its ban on retail access to select exchange traded notes, while still reviewing its position on derivatives. "Cryptoassets are high risk investments and will remain high risk under our regime," the FCA wrote.

Binance, the leading crypto exchange by trading volume, is also navigating separate regulatory issues across Europe. Last week, the firm formally withdrew its Markets in Crypto Assets (MiCA) application from Greece, a week after Reuters reported the application would be denied. A MiCA license would grant the firm approval to offer crypto services to users across the E.U. beginning July 1; without one, Binance cannot do so. After withdrawing from Greece, Binance said it would reapply through a different E.U. member nation, though it has not specified which.

Separately, Dutch prosecutors have asked a court in Rotterdam to declare Knaken Cryptohandel and an affiliated entity, Stichting Knaken Payments, bankrupt in what the Public Prosecution Service called "the public interest." Knaken has been offline since early June, leaving an estimated 30,000 customers locked out of their funds.