A group of UK investors are seeking roughly $200M in compensation from Zhao and his exchange. The reason: operating without regulatory approval. We break down what happened and what it means for crypto markets.
Nearly 1,700 UK investors have filed a class-action lawsuit against Binance and its founder Changpeng Zhao (CZ) in London’s High Court. The plaintiffs are seeking £150M, about $200M, in damages.
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Law firm KP Law, representing the investors, claims Binance offered and sold crypto derivatives–leveraged tokens, futures, and options–to UK retail clients without the proper regulatory authorization.
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What Binance and CZ Did Wrong — According to Investors
KP Law says Binance’s products violated the Financial Services and Markets Act 2000. The plaintiffs claim “there was no effective barrier preventing UK clients from accessing these products.” One victim, financial controller Thomas Soutas, invested more than $132K in Binance derivatives and lost everything. Other clients reportedly lost tens of thousands of pounds.
The FCA banned retail crypto derivatives in January 2021, citing extreme volatility and the high risk of sudden losses. The regulator estimated the ban would save retail consumers about £53M.
The plaintiffs say Binance continued promoting these products after the ban. Under the Financial Services Act, transactions arranged by an unauthorized firm may be voidable, allowing clients to recover their money.
Read more: Crypto Exchange Battle 2026: Binance vs Bybit — Where Do Traders Prefer to Trade?
Context: UK Crypto Regulation and Binance’s Position
A Binance spokesperson said the company “remains committed to its obligations to users and to operating in compliance with applicable law” and will defend itself through proper legal procedures.
Last week, Binance withdrew its MiCA license application in Greece, meaning it can no longer serve EU clients starting July 1. In 2023, the CFTC charged Binance and CZ with operating an illegal derivatives exchange, later settling for $4.3B–the largest penalty in crypto history.
This lawsuit raises a fundamental question: when an unlicensed platform sells high-risk products, who bears responsibility for the losses–the platform or the trader? If the court finds the trades voidable, it could set a precedent that undermines caveat emptor for crypto exchanges that sold unauthorized products.
Learn more: Binance Faces EU Exit — World’s Largest Crypto Exchange Misses MiCA License
