Binance, CZ Hit With £150M UK Suit as 1,700 Lever-Up Lamenters Say "Worth a Shot

Nearly 1,700 UK investors have filed a lawsuit against global crypto exchange Binance and its founder Changpeng Zhao in London's High Court, seeking at least £150 million ($200 million) over crypto derivatives they claim were sold without regulatory approval. The claimants allege Binance marketed leveraged trading products to retail users beginning in late 2019, with some reporting individual losses in the tens of thousands of pounds. A Binance spokesperson told Reuters the exchange "remains committed to its obligations to users and to operating in accordance with applicable law," and said the firm would defend itself against the claim. A representative did not immediately respond to a separate request for comment.

The UK's Financial Conduct Authority (FCA) announced a ban on retail crypto derivatives in October 2020, considering the products "ill-suited" to retail customers, with the restriction taking effect in January 2021. The regulator estimated the ban would save retail consumers around £53 million ($70 million) annually. The claimants argue Binance offered such products around the period of the ban, in potential breach of the Financial Services and Markets Act, under which deals arranged by an unauthorized firm can be ruled unenforceable. "Cryptoassets are high risk investments and will remain high risk under our regime," the FCA wrote in a policy overview published Tuesday, adding that it has recently lifted a ban on retail access to select crypto exchange traded notes but is still reviewing its position on derivatives.

The lawsuit names Cayman-registered Binance Holdings, UAE-based Nest Exchange, and unnamed operators, in addition to Zhao personally. Zhao pleaded guilty alongside Binance in a $4.3 billion US settlement with the Commodity Futures Trading Commission and other agencies in 2023 and was later pardoned in the US. Britain already required Binance to restructure its UK operations under financial promotion rules in 2023. The claim lands as Binance navigates separate European setbacks, formally withdrawing its Markets in Crypto Assets (MiCA) application from Greece last week after Reuters reported the application would be denied; a MiCA license would have permitted the exchange to serve EU users from July 1.