Binance Faces $200M UK Suit Tied to Derivatives; EU Market Access Cut Off Same Week

Binance is facing a £150 million ($200 million) lawsuit filed by nearly 1,700 British investors in London’s High Court, accusing the exchange of offering illegal derivative products without authorization from the UK’s Financial Conduct Authority. The suit landed the day before Binance was forced to withdraw its services from European Union markets after failing to secure a license under the bloc’s Markets in Crypto-Assets Regulation.

The claimants allege they lost significant sums, in some cases running into the millions, on derivative products offered by Binance between 2019 and 2020, according to Protos. That period falls under the leadership of Binance’s former CEO and founder, Changpeng Zhao.

Investors seek accountability from Zhao and Binance entities

A partner at KP Law, the firm representing the claimants, 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.”

Defendants named in the case include Zhao himself, Binance’s Cayman Islands entity, the UAE-registered Nest Exchange, and unidentified individuals said to operate the Binance Trading Platform, per Protos.

Binance responded by saying it will “defend against these claims through the appropriate legal process in due course,” adding that it “remains committed to its obligations to users and to operating in accordance with applicable law.”

MiCA deadline forces Binance out of the EU

The lawsuit’s timing coincides with Binance’s mandatory exit from EU territories, triggered by its failure to obtain a MiCA license despite six years to prepare for the regulation. Binance had initially pursued a license through Greece and believed it was on track for compliance, but withdrew that application on June 26 and said it would seek approval from a different member state.

The Block’s Gareth Jenkinson reported, citing an undisclosed source, that European Central Bank President Christine Lagarde “directly ordered Greece to reject Binance’s MiCA license application.” The source told Jenkinson that Binance had “essentially been given the green light by Greece’s regulator, before the ECB stepped in.”

Zhao told Jenkinson in an interview that two EU countries had been competing to approve Binance’s application before political intervention derailed the process.

Binance insists it isn’t leaving Europe for good

Binance’s Head of Europe and the UK, Gillian Lynch, maintained that “Binance is not leaving Europe,” while CEO Richard Teng said the company remains committed to securing a license “in the coming months.” Despite those assurances, the exchange did not find an alternative EU jurisdiction willing to approve it before the July 1 MiCA deadline took effect.

Binance has said affected users will retain the ability to withdraw their funds. Teng added: “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.”

Read more: Binance Defends MiCA Record After Withdrawing Greek License Bid