Nearly 1,700 UK investors have filed a £150 million (about $190 million) claim in London’s High Court against Binance and its founder Changpeng “CZ” Zhao, alleging the cryptocurrency exchange marketed and sold high-risk crypto derivatives to UK customers without the required authorization.
Claim Alleges Unauthorized Sale of Leveraged Products
The group action contends that Binance promoted and enabled trading in complex, leveraged crypto derivative products for UK users despite lacking permission to offer such products in the jurisdiction. The claimants argue these offerings exposed retail investors to substantial losses and breached UK financial services rules.
Regulatory Backdrop in the UK
The UK’s Financial Conduct Authority (FCA) has restricted crypto derivatives for retail consumers for several years. A 2021 FCA ban prohibits the sale, marketing, and distribution of derivatives and exchange-traded notes referencing certain cryptoassets to retail clients, citing market volatility, risks of leverage, and challenges in valuation. Separately, the FCA has issued consumer warnings about Binance’s UK operations, stating the firm was not permitted to conduct regulated activities in the country.
Why It Matters
The case underscores intensifying legal and regulatory scrutiny of global crypto platforms serving UK users. If successful, the claim could establish a precedent for investor redress linked to allegedly unauthorized crypto derivative sales and clarify the boundaries for offshore exchanges engaging with UK retail customers.
Next Steps
The High Court will determine procedural matters and whether the claim proceeds to trial. Binance and Zhao have not publicly commented on the latest filing. Allegations in the claim have not been proven in court.