Binance and Changpeng Zhao sued by 1,700 UK investors for £150M over unapproved crypto derivatives

Nearly 1,700 UK investors have filed a collective legal action against Binance Holdings Ltd., founder Changpeng Zhao, and Nest Exchange, seeking at least £150 million (roughly $200 million) in damages. The core allegation: Binance knowingly sold complex, high-risk crypto derivatives to retail customers in the UK without ever getting a green light from the Financial Conduct Authority.

The products in question include leveraged instruments, futures, and options, the kind of financial tools that can amplify gains but also vaporize portfolios in minutes. Many claimants say they suffered losses in the tens of thousands of pounds.

What the lawsuit actually claims

The claimants argue that Binance violated the Financial Services and Markets Act by offering unapproved derivatives starting in late 2019. The FCA enacted a complete ban on the sale and marketing of crypto derivatives to retail customers in January 2021. That means the alleged conduct stretches from late 2019 through the period when regulators were actively moving to shut down exactly these types of offerings.

The defendants named in the filing include Binance Holdings Ltd., which is registered in the Cayman Islands, along with Nest Exchange based in the UAE, Zhao personally, and unnamed additional persons.

Binance’s UK entity had already faced regulatory constraints in 2021 and subsequently canceled its permissions. The lawsuit essentially asks whether the damage was already done before those restrictions took effect.

Binance has responded by asserting its commitment to compliance with relevant laws and confirming it intends to defend the case. The exchange did not offer additional comment on the specifics of the litigation.

The regulatory backdrop

The FCA has long taken a dim view of crypto derivatives being marketed to retail investors. The January 2021 ban was the culmination of that stance.

The case also lands during a pivotal moment for UK crypto regulation. The FCA is actively preparing a new regulatory framework for cryptocurrencies, expected to be implemented by 2027.

Binance’s regulatory troubles extend well beyond British shores. The exchange reached significant settlements with US regulators in 2023 over compliance and licensing issues. Zhao himself pleaded guilty to violations of the Bank Secrecy Act in the US and stepped down as CEO. He served a four-month prison sentence before being released in late 2024.

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