Nearly 1,700 British investors filed a lawsuit in the London High Court against Binance and its founder Changpeng Zhao, seeking at least £150 million ($200 million) in damages over claims the exchange sold high-risk derivative products to retail customers without regulatory authorization.
The case, filed Tuesday, names Cayman Islands-registered Binance Holdings, UAE-registered Nest Exchange, Zhao, and "persons unknown" who operate the Binance trading platform as defendants. Law firm KP Law is representing the claimants.
The lawsuit alleges that Binance promoted leveraged tokens, futures contracts, and options to UK retail customers from late 2019, and that these products continued to be accessible after the Financial Conduct Authority banned crypto companies from offering derivatives to retail customers in January 2021.
"There appeared to be no effective barrier preventing UK customers from accessing them," KP Law said.
Binance acknowledged the legal action but gave no substantive response to the specific claims.
"Binance remains committed to its obligations to users and to operating in accordance with applicable law," a company spokesperson said, adding that the exchange would defend against the claims through the appropriate legal process.
Customer losses and the scale of potential exposure
Individual losses among the claimants ranged into the tens of thousands of pounds. Tomas Sutas, a financial controller named in Financial Times reporting, allegedly invested more than $132,400 in Binance's derivatives products before the value was wiped out entirely.
KP Law said the identification of affected customers was still ongoing.
"While the precise number of UK customers affected is not publicly known, Binance is one of the world's largest cryptocurrency exchanges, meaning that a substantial number of users could potentially have been exposed to these issues," the firm said.
The FCA informed Binance Markets Limited in June 2021 that it could not operate in the UK without written consent, heavily restricting the platform's British presence. The regulator's 2021 retail derivatives ban was designed to protect consumers from exactly the type of products at the center of the lawsuit. FCA data cited in earlier reporting suggested the ban was intended to save consumers approximately $70 million.
Under the UK Financial Services and Markets Act, agreements managed by firms without prior authorization can potentially be declared void, which could require the full restoration of investor losses rather than simply damages.
A lawsuit that arrives as Binance's EU licensing path collapses
The London legal action lands at a difficult moment for Binance's regulatory standing in Europe. Binance withdrew its Markets in Crypto-Assets application with Greece's Hellenic Capital Market Commission this month after the process stalled ahead of the July 1 MiCA transitional deadline. The exchange's main operating license now sits in the United Arab Emirates.
Binance has also faced separate allegations in the US that it facilitated $850 million in transactions tied to a sanctioned Iranian financier connected to Iran's Islamic Revolutionary Guard Corps. The exchange denied those allegations.
The CFTC settlement and what the London case adds
The UK lawsuit is not Binance's first major legal confrontation over derivatives. In 2023, the US Commodity Futures Trading Commission accused Binance and Zhao of operating an illegal derivatives market. That case ended in a plea agreement and a $4.3 billion fine, one of the largest financial penalties in crypto history. Zhao personally pleaded guilty and stepped down as CEO.
The London claim raises a structurally different argument. The CFTC case centered on Binance's failure to register with US regulators. The UK claim is grounded in the Financial Services and Markets Act, which provides a specific legal route for investors to recover funds if a firm conducted regulated activity without authorization. That distinction matters because the statutory framework in the UK could require Binance to make investors whole rather than simply face a regulatory penalty.
What KP Law said about the regulatory breach
KP Law framed the alleged violation in terms of the products' continued availability after the FCA's January 2021 ban, not just their original offering. The firm said Binance's advertising campaigns on social media and email continued to promote high-risk products to UK users even after the regulatory ban was in place.
The defense argument available to Binance would likely rest on the premise that users accepted risks voluntarily through terms of service. KP Law's position is that a firm operating without authorization cannot rely on those protections under UK law.
The number of claimants may grow. KP Law confirmed it is still identifying the full scope of affected customers, meaning the £150 million figure represents a floor rather than a ceiling on the potential claim.
Tanya Petrusenko
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