A group of 1,692 UK investors has filed a class action lawsuit against Binance and its founder and former CEO Changpeng Zhao (창펑 자오). On July 2, Coinpost, a blockchain media outlet, reported that the plaintiffs are seeking damages and compensation for losses, alleging Binance sold and promoted crypto derivatives to UK consumers without authorisation from 2019.

The lawsuit was filed at the London High Court on June 29. KP Law Firm, representing the plaintiffs, submitted the complaint under the name of Thomas Stas. It alleges Binance provided UK users with leveraged tokens, crypto futures, options and margin trading products without authorisation from around Sept. 13, 2019. The filing seeks damages and compensation for losses based on alleged violations of the UK Financial Services and Markets Act, as well as interest under the High Court Act 1981.

The defendants include Binance Holdings registered in the Cayman Islands, Nest Exchange registered in Abu Dhabi, and Zhao. Unspecified individuals who operated or operate the Binance platform were also named as a fourth defendant. The plaintiffs said Zhao and Binance Holdings acted under a "common design" with the actual operator, and also sought to hold them liable for joint torts.

The claim amount was listed in the filing as more than 200,000 pounds, or about 412 million won, but this is close to a minimum bracket used to calculate court fees. KP Law Firm separately explained that the actual total amount claimed exceeds 150 million pounds, or about 310 billion won. Some plaintiffs say they suffered losses of tens of thousands of pounds.

The core issues in the case are the timing of Binance's derivatives sales in the UK and the scope of regulatory application. The UK's Financial Conduct Authority banned crypto companies from offering derivatives to retail investors in 2021. Binance later introduced some access restrictions, including requiring UK users to provide additional information. The plaintiffs say the sales at issue continued from 2019.

Regulatory issues are not limited to the UK. Binance recently withdrew an application for a licence related to the European Union's crypto regulatory framework MiCA that it had been pursuing in Greece. Zhao said the application "fully met the requirements and was just before approval," but added it was derailed by "political pressure."

Binance now faces both the UK lawsuit and its response to European regulation. The trial is expected to focus on whether past derivatives sales to UK users violated local financial law and which entities and individuals within Binance's governance structure will be recognised as the parties actually responsible.