Binance hit with $200M UK lawsuit one day before EU exit

Binance has been hit with a £150 million ($200 million) lawsuit, accusing it of offering illegal derivative products, just one day before the exchange is due to exit EU markets.

Almost 1,700 British investors joined together to file the lawsuit in London’s High Court yesterday, claiming it offered risky derivative products without permission from the UK’s financial regulator, the FCA. 

Investors claim to have lost tens of thousands, and in some cases millions, on derivatives offered between 2019 and 2020 while the exchange was under the leadership of its former CEO and founder, Changpeng Zhao.  

A KP Law partner told the Financial Times, “Our clients are ordinary people, many of whom committed significant savings and who have suffered real financial harm. We are determined to hold Binance and its founder, Changpeng Zhao, to account.”

The exchange said it 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.”

Defendants in the lawsuit include Zhao, Binance’s Cayman Islands entity, the UAE-registered Nest Exchange, and unknown persons operating the ​Binance Trading ⁠Platform.

The lawsuit was filed just one day before Binance has to remove its operations from EU territories today, due to its failure to secure a license under the bloc’s Markets in Crypto-Assets Regulation (MiCA). 

Binance had originally been earmarked to secure a license from Greece and believed it was compliant with MiCA regulations. It then withdrew its application on June 26 and claimed it would pursue a different EU member state. 

According to The Block’s Gareth Jenkinson, European Central Bank President, Christine Lagarde, “directly ordered Greece to reject Binance’s MiCA license application.”

Jenkinson’s undisclosed source claimed Binance had “essentially been given the green light by Greece’s regulator, before the ECB stepped in.”

I am reliably informed that ECB president Christine Lagarde directly ordered Greece to reject Binance’s MiCA license application.

My source said Binance had essentially been given the green light by Greece’s regulator, before the ECB stepped in.

Not good news for crypto if the… https://t.co/sLpBaoxx0L

Read more: Binance probed by DoJ, files lawsuit against WSJ

Zhao claimed in an interview with Jenkinson that two EU countries were vying for Binance’s application until political forces intervened. 

Despite the setback, Binance Head of Europe and the UK, Gillian Lynch, boldly claimed, “Binance is not leaving Europe.”

Binance CEO Richard Teng also said the company is committed to securing a license “in the coming months.”

However, it appears Binance has failed to find another welcoming EU country in time for the July 1 MiCA deadline, which it’s had six years to prepare for. 

The exchange has stressed that any impacted users will still have access to withdraw their funds. 

Teng added today, “Please know that we are working hard behind the scenes, including in close engagement with regulators, to navigate this transition responsibly and to continue serving our users in the best way possible.”

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