Binance
- A group of investors claiming $20 million in damages from a Binance service outage has raised $5 million to sue the crypto exchange, according to the Financial Times.
- Binance has attributed the freeze to technical problems and said it took "immediate steps to engage with users affected by the outage."
- Yet the case will likely be complicated by the ambiguous legal status of Binance.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
A group of investors who say they were burned by a Binance service outage has raised $5 million to sue the crypto exchange, according to a Financial Times report.
The $20 million of collective damages that the investor group is claiming stems from an episode in May when Binance's trading platform crashed amid volatile crypto markets. Some traders who had taken out leveraged crypto positions saw their accounts forcibly liquidated – without any ability to sell out of the position.
Binance has attributed the service freeze to technical problems and said it took "immediate steps to engage with users affected by the outage."
The group, which has hired the elite law outfit White & Case, currently has six investors but hopes to sign up hundreds as the case progresses, according to the FT.
Yet the case will likely be complicated by the ambiguous legal status of Binance. Leaning into crypto's decentralized ethos, the exchange does not have a formal headquarters and is scattered throughout the world.
"What makes this case peculiar and special is that Binance is everywhere and nowhere," Angelo Messore, head of Italian law firm Lexia's financial unit, told the FT. Lexia in July announced it would pursue a class-action suit against Binance.
Binance has come under heated scrutiny by governments around the world, with some regulators banning the platform and others curbing its use. Earlier this week, Binance CEO Changpeng Zhao said he spends "probably 80% or more" of his time dealing with regulatory issues, rather than the exchange itself.