Disgruntled traders claim that if they do not receive compensation, they will pressure European regulators to take action against the exchange
- Not an isolated case
- Regulatory issues
Binance, the largest cryptocurrency exchange by reported trading volume, is facing a class action lawsuit by the Italian law firm Lexia Avvocati and the Swiss blockchain consortium, Milano Finanza reports.
The lawsuit aims to seek compensation for damages and losses suffered by a group of futures traders from Italy and other countries that began on February 8, the day Tesla made its $ 1.5 billion -Announced the purchase of Bitcoin, had no access to the trading platform for several hours.
The Musk tweet caused a massive spike in volatility and traders were unable to manage their open trading positions and view their balances due to the unscheduled suspension. This resulted in a series of unnecessary liquidations that totaled “tens of millions” in losses.
On February 23, Binance released a notice of an issue with their futures system recorded the day before, urging affected users to file a claim.
While some Lexia Avvocati clients have filed claims, the law firm writes in their letter that they had to decline the offer because Binance made “ridiculous” compensation proposals:
In response to such claims, Binance offered a pathetic amount to compensate for the losses suffered by customers who had no choice but to turn down such ridiculous proposals.
Not an isolated case
Lexia Avvocati claims that Tesla’s big bitcoin bombshell was not an isolated incident. Binance’s trading systems were also suspended for several hours on May 19, the day Chinese financial regulators announced that banks and financial firms had been banned from providing services to cryptocurrency customers.
Similar incidents occurred on April 18, May 5, May 28 and June 4.
Binance can compensate traders until July 12 to avert the large class action lawsuit, the letter said.
Aside from taking Binance to court, plaintiffs are also warning against reaching out to regulators in the European Union and Switzerland, urging them to take action against the exchange and even shut it down.
Lexia Avvocati’s lawyers explain that Binance is apparently not authorized to offer its futures trading product in Europe under Directive 2014/65 / EU.
The world’s largest crypto exchange has undergone immense scrutiny in recent weeks by regulators around the world, including a criminal complaint from the Thai SEC.
As reported by U.Today, British banking giant Barclays blocked debit card payments to Binance on Tuesday following a recent notice issued by the Financial Conduct Authority.