1,700 Leveraged and Litigious: Binance Faces £150M UK Showdown Over Derivatives Era

Nearly 1,700 UK investors have filed a lawsuit against Binance and founder Changpeng Zhao in London's High Court, seeking at least £150 million ($200 million) over crypto derivatives they allege were marketed to retail traders without regulatory approval. The claim, brought by law firm KP Law, targets Binance Holdings (Cayman), UAE-based Nest Exchange, and unnamed operators, and covers products including leverage tokens, futures contracts and options allegedly offered between late 2019 and 2020. Individual claimants say they lost tens of thousands of pounds; one named plaintiff, Tomas Sutas, a financial controller, reportedly invested more than £100,000 ($132,400) before the value of his positions was wiped out.

KP Law said the offerings breached the Financial Services and Markets Act 2000, noting that "there appeared to be no effective barrier preventing UK customers from accessing them." Under the statute, agreements arranged by an unauthorized firm can be ruled unenforceable, a provision that could allow users to reclaim their funds and losses. Britain's Financial Conduct Authority banned retail crypto derivatives effective January 2021, citing volatility and the products being "ill-suited" to retail customers, and estimated the ban would save consumers around £53 million ($70 million). The FCA this week published an overview noting it has lifted restrictions on certain exchange traded notes (ETNs) for retail investors while continuing to review derivatives access. "Cryptoassets are high risk investments and will remain high risk under our regime," the regulator wrote.

A Binance spokesperson told multiple outlets the firm "remains committed to its obligations to users and to operating in accordance with applicable law" and would defend against the claims through the appropriate legal process. The exchange's UK operations have been restricted since June 2021, when the FCA informed Binance Markets Limited it could not operate in the country without written consent. In 2023, the US Commodity Futures Trading Commission charged Binance and Zhao with running an illegal derivatives exchange; both later pleaded guilty in a $4.3 billion settlement, the largest in the crypto sector to date. Zhao, pardoned in the US last year, is named personally in the UK filing.

The lawsuit adds to a mounting list of regulatory and legal pressures on Binance in Europe. Last week the firm formally withdrew its Markets in Crypto Assets (MiCA) application from Greece after Reuters reported the application would be denied, leaving it without the authorization needed to serve EU users under the framework that took effect July 1. Binance said it would reapply through a different EU member state, without naming one. Separately, the exchange has denied allegations reported elsewhere that it facilitated $850 million in transactions linked to a sanctioned Iranian financier and Iran's Islamic Revolutionary Guard Corps.

The public dispute with OKX resurfaced alongside the filing, with OKX chief executive Star Xu saying he is "ashamed of" Zhao and referencing "his jail time as a convicted criminal," while Zhao dismissed Xu as "jealous." The London case, regardless of its outcome, lands as the FCA prepares a fuller risk-based crypto framework for rollout from 2027, under which affected users will be able to pursue claims over corporate misconduct directly against exchanges and executives.