Nearly 1,700 UK investors have filed a lawsuit against Binance and its founder Changpeng Zhao (CZ) in London's High Court, seeking at least £150 million ($200 million) over crypto derivatives allegedly sold unlawfully. The claimants argue that Binance marketed high-risk leveraged products to retail traders from late 2019 without proper authorization from the UK Financial Conduct Authority (FCA). Many investors report losing tens of thousands of pounds when their trades turned against them. The case tests a key legal question: when an unlicensed platform sells high-risk products, who bears the losses? The UK's FCA banned retail crypto derivatives in January 2021, citing extreme volatility, but the claimants say Binance pushed such products around that ban, breaching the Financial Services and Markets Act. Under this law, deals arranged by an unauthorized firm can be ruled unenforceable, allowing clients to reclaim their money. Binance has vowed to defend the claim, stating it honors its legal duties. The lawsuit echoes earlier US charges where Binance and CZ pleaded guilty to operating an illegal derivatives exchange, resulting in a $4.3 billion settlement. The London claim names Cayman-registered Binance Holdings, UAE-based Nest Exchange, and unnamed operators, with CZ named personally. The timing is notable as Binance exits Europe after its EU license bid failed. If the court voids these deals, it could set a precedent impacting the broader crypto industry.

Key facts

• 1,700 UK investors sue Binance and CZ in London High Court for at least £150 million.
• Claimants allege unauthorized sale of leveraged crypto derivatives to retail traders since late 2019.
• UK FCA banned retail crypto derivatives in January 2021, citing extreme volatility and consumer risk.
• Binance pledges to defend, citing compliance obligations; prior US settlement of $4.3 billion for similar charges.
• Case outcome could set legal precedent on liability for unauthorized crypto product sales.

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