Binance faces UK lawsuit over crypto derivatives sales

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Binance UK lawsuit crypto derivatives

Highlights

KP Law files a London High Court lawsuit alleging Binance offers banned crypto derivatives to UK retail clients in breach of the Financial Services and Markets Act 2000.
Multiple UK investors, including Tomas Sutas who lost over £100,000, suffered significant losses, with KP Law still assessing the total affected user base across Binance’s large UK clientele.
Legal pressures intensify for Binance as its UK operations remain restricted since June 2021, it misses the EU MiCA licensing deadline, and denies facilitating $850 million in transactions linked to a sanctioned Iranian financier.

Claims focus on banned retail products

As reported by Cointelegraph, law firm KP Law says Binance’s leverage tokens, futures contracts and options offerings breach the Financial Services and Markets Act 2000 and continue to be offered after the Financial Conduct Authority bans such products for retail customers in January 2021.

KP Law says there appears to be no effective barrier preventing UK customers from accessing the products. Reuters reports the lawsuit is filed in the London High Court, with Binance-affiliated Nest Exchange and "persons unknown" also named as defendants.

Binance says it will defend against the claims through the appropriate legal process and remains committed to its obligations to users and to operating in accordance with applicable law.

Legal risks widen for Binance in the UK and Europe

One affected customer, Tomas Sutas, a financial controller, allegedly invests more than 100,000 pounds in Binance derivatives products before the value of his investments is wiped out, the Financial Times reports. Reuters also says multiple UK users lose tens of thousands of pounds through the products.

KP Law says it is still identifying the full scope of affected customers and that the total number exposed is not publicly known. Given Binance’s scale as one of the world’s largest cryptocurrency exchanges, the law firm says a substantial number of users could potentially be affected.

Binance’s UK operations become heavily restricted in June 2021 when the FCA informs Binance Markets Limited that it cannot operate in the region without written consent. The lawsuit comes as Binance also recently fails to secure a Markets in Crypto-Assets-compliant license from a European Union member state before the July 1 deadline and denies separate allegations that it facilitates 850 million dollars in transactions tied to a sanctioned Iranian financier.

Coinbase’s recent slide in COIN shares came despite operational progress in Europe that we previously covered, including a MiCA license win in Luxembourg and initiatives to expand EU stablecoin payment capabilities. Our earlier article noted that the market still focused on technical weakness and persistent selling pressure, even as institutional activity and regulatory milestones improved Coinbase’s positioning in the region.

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