Binance Faces $200M UK Class Action Over Unregulated Derivatives

Binance and founder Changpeng Zhao face a $200 million class action lawsuit in London. Law firm KP Law filed the claim on behalf of roughly 1,700 investors who say the exchange offered risky crypto derivatives to UK retail consumers between 2019 and 2020 without authorization from the Financial Conduct Authority. The investors allege the products were unsuitable and unregulated at the time.

The lawsuit targets both Binance and CZ personally. The FCA is building a risk-based crypto framework set for 2027 that would let users sue exchanges and executives for misconduct. The current action predates that regime and relies on existing consumer protection laws.

A Binance spokesperson said the exchange will defend itself and is committed to operating within applicable rules. Binance has faced growing regulatory scrutiny, which contributed to a broader crypto market downturn earlier this year. The exchange also failed to secure approval under the EU's MiCA framework.

The legal pressure has reignited a public feud between CZ and OKX CEO Star Xu. Xu criticized CZ over Binance's regulatory troubles and pointed to the October 2025 market crash, which he blamed on the exchange's practices. CZ dismissed the criticism as jealousy. Xu responded with a statement:

Xu and CZ have a long history. Xu was CZ's boss at OKCoin before CZ left to found Binance. Their rivalry has persisted for years.

Binance has assured EU users that their assets are safe and held on a 1:1 basis, with transfers and withdrawals available. The UK lawsuit adds another layer of regulatory risk for the exchange, which already faces challenges in Europe.