Nearly 1,700 British investors allege Binance sold leveraged derivatives it was not authorised to offer under UK law, in a claim filed as the exchange continues to navigate regulatory challenges across multiple jurisdictions.
Binance and co-founder Changpeng Zhao are facing a group legal claim filed at the UK High Court on Monday by 1,692 retail investors, who allege the exchange sold unauthorised derivative products to UK clients in 2019 and 2020.
The claimants, represented by KP Law, argue that Binance sold products that qualify as "specified investments" under the Financial Conduct Authority's rules, meaning the exchange required FCA authorisation or an exemption to offer them.
It had neither, according to the claim. Lawyers for the claimants say they are seeking up to £150 million.
What the Claim Says
The suit centres on leveraged derivatives that let retail traders amplify gains or losses. The claimants allege Binance promoted the products through online materials, social media posts, email communications and other marketing in breach of the Financial Services and Markets Act.
Hannah Sharp, partner at KP Law, said the claimants are "ordinary people, many of whom committed significant savings," and described some losses as running into "tens of thousands and in some cases millions of pounds."
One named claimant, Tomas Sutas, invested more than £100,000 in the products before losing the position. As of Monday's filing, Binance had not yet acknowledged service of the claim.
In a statement to press, the exchange said: "We do not comment on ongoing litigation. We will defend against these claims through the appropriate legal process in due course. Binance remains committed to its obligations to users and to operating in accordance with applicable law."
Regulatory Context
The FCA banned the sale of crypto derivatives to UK retail clients in January 2021, citing volatility and the difficulty retail investors face in valuing the products.
The activity covered by the claim predates that ban. Binance has previously faced regulatory and criminal enforcement elsewhere. In 2023, the exchange pleaded guilty to US criminal charges related to money laundering and sanctions violations, agreeing to pay more than $4.3 billion in penalties.
Zhao resigned as CEO, pleaded guilty to a related charge and later served four months in prison before receiving a presidential pardon. The lawsuit also follows Binance's recent decision to withdraw its MiCA licence application in Greece and begin winding down parts of its EU business while it pursues authorisation elsewhere in the bloc.
Separately, the FCA this week published its landmark rules for the UK's crypto industry, continuing the regulator's broader effort to formalise oversight of digital assets.
This article was written by Tanya Chepkova at www.financemagnates.com.
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