Nearly 1,700 UK investors sue Binance and CZ for $200M over unauthorized derivatives

Roughly 1,700 UK investors have taken Binance and its founder Changpeng Zhao to court, seeking more than £150 million (approximately $200 million) in damages over allegedly unauthorized crypto derivatives sold to retail users. The group lawsuit was filed in London’s High Court on June 30.

The claim targets Binance Holdings Ltd, Nest Exchange, CZ, and unnamed individuals. At its core, the allegation is straightforward: Binance sold leveraged tokens, futures contracts, and options to UK retail investors starting in late 2019 without proper authorization, violating the Financial Services and Markets Act 2000.

What the claimants are alleging

The UK’s Financial Conduct Authority banned the sale of crypto derivatives to retail consumers on January 6, 2021. The FCA’s reasoning was blunt: these products posed unacceptable risks to retail investors due to extreme volatility, inadequate understanding of the products, and the potential for catastrophic losses.

But the claimants aren’t just pointing to the post-ban period. They allege that Binance was selling these derivatives to UK retail users since late 2019, meaning the platform was operating outside regulatory boundaries even before the FCA’s explicit ban took effect.

Individual losses among the claimants reportedly run into tens of thousands of pounds each.

Binance has said it intends to contest the claims while affirming its commitment to complying with applicable regulations.

The regulatory backdrop

The FCA issued a consumer warning about Binance Markets Limited in June 2021, stating the entity was not permitted to undertake any regulated activity in the UK.

CZ pleaded guilty to violating US anti-money laundering laws in late 2023 and served a four-month prison sentence. He stepped down as Binance CEO as part of the resolution, though he remains the exchange’s largest shareholder and most recognizable figure.

What this means for investors

If this lawsuit succeeds, it won’t just be a Binance problem. It will be a precedent-setting moment for every crypto exchange that offered derivatives to UK retail customers during the same period. The legal theory is relatively simple: if a platform sold unauthorized financial products to consumers, those consumers deserve compensation for their losses.

Investors watching this case should pay attention to whether it triggers similar actions in other European markets, particularly as the EU’s Markets in Crypto-Assets regulation creates new compliance obligations.

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