1,700 UK investors have launched a group lawsuit in London’s High Court against Binance and founder Changpeng Zhao.

The claimants say the pair sold risky crypto derivatives products to retail investors without authorization.

UK Investors Demand $200M from Binance

The plaintiffs allege that between around late 2019 and 2020, Binance offered products such as leveraged tokens, options, contracts, and futures without the approval of the UK’s Financial Conduct Authority (FCA).

The victims filed the lawsuit under the Financial Services and Markets Act, claiming the derivatives are “specialized investments” under the rules. The UK regulator banned Binance from selling these complex investment products in 2021, but the exchange continued to sell them to its users, they say.

The crypto traders also accuse it of promoting the products through advertising campaigns, online materials, social media posts, and email communications.

Hannah Sharp, a partner at the law firm representing the victims, said its clients had suffered lots of financial losses and that it was determined to hold CZ and the exchange accountable.

The Financial Times reported that traders lost tens of thousands of dollars, and in some cases millions. The claimants are now seeking about $200 million in compensation.

Binance Acknowledges Lawsuit

Binance has yet to respond to the accusations in the lawsuit, but has acknowledged it’s aware of the proceedings.

“We do not comment on ongoing litigation. We will defend against these claims through the appropriate legal process in due course,” said the firm in a statement.

The case adds to a list of legal and regulatory challenges it has faced in recent years, including its recent failure to secure an EU crypto license.

Following the setback, Binance initially informed customers that it would stop offering services in the region. However, CZ later emphasized that it remains committed to Europe and plans to apply for a permit through another jurisdiction.

This was after the European Securities and Markets Authority (ESMA) ordered all unauthorized digital asset firms to wind down their operations by July 1 if they failed to obtain a MiCA license before the deadline. Meanwhile, crypto executives say that the directive is expected to affect more than 80% of crypto platforms in the region.

UK regulators have long been known for their cautious approach, warning users that crypto is a high-risk investment. The FCA also recently unveiled its long-awaited rules for the sector, which will see firms have to meet financial safety standards, comply with anti-money laundering and market abuse laws, and satisfy consumer protection requirements.

Source: CryptoPotato