UK Investors Sue Binance and CZ for £150M Over Unauthorised Crypto Derivatives

Nearly 1,700 British cryptocurrency investors have filed a group legal action in London's High Court against Binance and its founder Changpeng Zhao. They seek at least £150 million in damages, roughly $200 million.

The claim centres on crypto derivatives products – futures and options, including perpetual swaps – that the investors say were marketed and sold to UK retail clients without proper authorisation. Binance did not hold the required permissions from the Financial Conduct Authority to offer derivatives to British consumers during the relevant period, the lawsuit alleges.

The FCA banned the sale of crypto derivatives to retail investors in October 2020, citing the risk of sudden losses. It followed that with a consumer warning against Binance Markets Limited in June 2021, stating the firm was not permitted to undertake any regulated activity in the UK. The regulator later issued a formal notice that Binance's UK entity could not offer derivatives or other regulated products to retail clients. Binance Markets Limited had applied for FCA registration but never received full authorisation. The FCA said at the time that Binance's UK entity was not capable of being effectively supervised. The investors claim Binance continued to serve UK users through its global platform, Binance.com, despite those warnings.

The case is brought by law firm Leigh Day, which has experience in group litigation against financial firms. The firm previously represented investors in actions against Royal Bank of Scotland and secured compensation for victims of the Carillion collapse. In this case, Leigh Day argues that Binance and Zhao are jointly liable for losses suffered by UK investors who traded crypto derivatives without the protections that come with regulated products. The claim relies on the Financial Services and Markets Act 2000, which requires firms offering regulated products in the UK to be authorised. Derivatives trading carries higher risk than spot trading because of leverage. A retail investor using 10x leverage on a futures contract can lose their entire position on a 10% price move. Leigh Day contends that UK investors were exposed to these risks without safeguards that FCA-authorised firms must provide, such as negative balance protection and clear risk warnings.