Binance and its CEO CZ are being targeted with a $200 million legal action in the UK due to leveraged products.
Summary of the text
- Nearly 1,700 British investors take legal action worth $200 million against Binance and Changpeng Zhao.
- Case reports losses with leveraged products following the FCA prohibition in January 2021.
- Some candidates experience financial losses amounting to tens of thousands of dollars.
- FCA confirms on Tuesday that cryptocurrencies will continue to be regarded as high-risk investments.
- Binance decided to retract its MiCA license application in Greece following a notification from Reuters indicating that it would not be approved.
Binance and its founder, Changpeng “CZ” Zhao, have reacted to a group legal action in the UK seeking compensation of around $200 million (£150 million), as reported by Reuters.
Binance provided intricate and high-risk financial products like leveraged derivatives without obtaining the necessary regulatory approval for trading them in the country.
Binance is the subject of legal proceedings in the United Kingdom.
About 1,700 investors are involved in the lawsuit, with some saying they lost tens of thousands of dollars when trading these products in late 2019.
Binance expressed its commitment to fulfilling its obligations to users and complying with the law in a note sent to the agency.
The exchange also stated its plans to contest the allegations in court.
Derivatives for individual investors were prohibited by the regulator.
Investors had been able to access the products prior to the regulatory change, but in October 2020, the UK Financial Conduct Authority (FCA) prohibited the sale of cryptocurrency derivatives to retail customers.
These instruments are considered highly risky and not appropriate for non-professional investors according to the regulator’s assessment. The prohibition took effect in January 2021.
The FCA recently updated its policy on cryptocurrencies, permitting retail investors to access specific ETNs. However, the organization is still considering whether to maintain restrictions on derivatives.
Crypto assets will still be considered high-risk investments by British authorities, even with the new regulations in place.
Binance encounters fresh obstacles in Europe.
Binance is also encountering regulatory challenges in Europe, in addition to legal proceedings in the UK.
Last week, the company decided to retract its license application under the Markets in Crypto-Assets (MiCA) regulation in Greece, following reports that authorities might reject it.
The MiCA license enables companies to provide cryptocurrency services across all European Union nations. Binance is unable to operate in this market without such authorization under the revised regulatory framework.
The exchange withdrew its application in Greece and plans to seek a license in a different European Union country, although the specific jurisdiction has not been disclosed yet.
- Cryptus
- Binance
- Cryptocurrencies are digital forms of currency.
- England
- Regulation
- European Union
