Binance is facing a major legal challenge in the UK after a group of nearly 1,700 investors accused the exchange and its founder, Changpeng Zhao, of causing losses through crypto-linked trading products that should not have been offered to retail users.
The claim seeks about £150 million in compensation and is being handled by KP Law, which argues that UK consumers were given access to Binance derivative products before and after tighter rules came into force.
The disputed products include leveraged tokens, futures and options, all of which allow traders to speculate on cryptocurrency price movements without simply buying and holding the underlying coins.
The claim argues that Binance allowed UK customers to trade regulated financial products without the authorisation required under the Financial Services and Markets Act 2000.
KP Law says Binance had made the products available to UK consumers since 2019, before the issue intensified when retail access to crypto derivatives was banned in January 2021.
Binance’s derivatives offering draws legal heat
KP Law says the action is open only to UK users who traded certain Binance derivatives, with the claim covering leveraged tokens, including UP and DOWN tokens, as well as futures contracts and options.
Unlike ordinary crypto purchases, these instruments are built for more complex market exposure, with leveraged tokens magnifying both gains and losses and derivative contracts setting conditions around future trades.
KP Law says the claim does not extend to other Binance services, including spot trading, margin trading, Dual Investment, structured yield products and Simple Earn.
KP Law claim leans on FCA intervention
The UK’s Financial Conduct Authority had already moved against the retail sale of crypto derivatives before Binance came under further scrutiny.
In June 2021, the regulator imposed restrictions on Binance Markets Limited, stopping the UK-based entity from carrying out regulated activities without written consent.
KP Law points to the FCA’s notice, which said products that appeared to be banned crypto derivatives were being marketed or sold through Binance.com and that UK customers did not appear to be effectively blocked from accessing them.
The firm says hundreds of impacted customers have already instructed it and is inviting others who traded the covered products to assess whether they can join the claim.
MiCA rules deepen Binance’s European legal pressure
The UK lawsuit adds to Binance’s regulatory difficulties in Europe, where the exchange has faced uncertainty under the EU’s Markets in Crypto-Assets regulation, known as MiCA.
The framework requires crypto companies to secure authorization from an EU member state before they can offer services across the bloc, placing greater scrutiny on governance, consumer protection and financial-crime controls.
The stakes are high because MiCA allows licensed crypto firms to use a single approval to serve customers across the EU.
Companies that fail to secure authorization may instead face restrictions on where they can operate and what services they can provide.
Binance has not yet secured a full MiCA licence, leaving questions over how broadly it can serve European users as the new regime takes effect.
