Binance to Face Class Lawsuit from Futures Traders
Binance may be the subject of a lawsuit from a blockchain firm in Switzerland and Lexia Avvocati, a law firm in Italy arising from claims by some traders that the crypto exchange is responsible for the losses incurred. Traders from Italy and other countries are asking for compensatory measures to be taken by the exchange in view of a site shutdown that occurred in February.
The crypto exchange was inaccessible for several hours following Tesla’s $1.5 billion Bitcoin buy which saw the price of the top crypto asset spike massively. After Elon Musk announced via a tweet that Tesla had purchased Bitcoin in bulk, futures traders in most countries had tried to access their open positions and balances, but were unable to. This had led to a series of liquidations amounting to millions of dollars. If the exchange were accessible during that period, the losses would have been managed.
Later in February, Binance had issued a notice as regards the challenge encountered by traders and asked them to lay claims. However, upon laying claims, it was reported that the compensation offered by the crypto exchange was ridiculous, far lower than the losses incurred by this set of traders.
Italian Law Firm Claims Incident not Isolated
Interestingly, similar incidents had occurred at different intervals, giving the impression that the February and subsequent shutdowns were deliberate. The Italian law firm alleged that the February incident wasn’t an isolated incident. In May, China ordered banks and other financial institutions to withdraw their services to crypto exchanges in the country. Following the order, Binance’s trading platform was in recess for hours on end. The same incident happened at intervals in May. In April and June, a similar thing happened.
In the letter addressed to Binance, the law firm warned that the crypto exchange had until July 12 to adequately compensate the affected traders. Non-compliance by Binance would make it go ahead with the suit, Lexia Avvocati said. Apart from the lawsuit, the affected parties also threatened to petition EU and Swiss regulators to take regulatory actions against the exchange or even shut down its operations. Lexia Avvocati noted that Binance did not have the approval of any authority to promote its futures trading offerings.
Binance Ceases Operations in the UK and Ontario
Binance is now involved in a slew of regulatory fray. The exchange’s operations was recently outlawed by the UK Financial Conduct Authority (FCA), forcing it to quit its trading operations in the country. Similarly, the exchange had to cease its activities in the Ontario region of Canada.
In a similar development, Thailand’s Securities and Exchange Commission issued a complaint against it recently. Also, in South Korea, the exchange was issued a warning by the regulatory body to comply with existing regulations. While it may seem that Binance is now the only subject of recent hostile regulations, it is not; other exchanges, including India’s WazirX have had their fair share of these regulations.
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