Crypto exchange Binance is facing another legal action. It is not the CFTC threatening the world’s largest exchange this time.
Binance has been betrayed by its own crypto traders. But on the traders’ side, Binance betrayed them first on May 19 when it suspended trading and liquidated all running positions during an outage.
Liti Capital Commits Over $5 Million to the Traders’ Case against Binance
The disgruntled Binance crypto traders have the backing of Swiss litigation finance group Liti Capital, which has committed over $5 million to help them get justice. Although the crypto exchange Binance does not have any physical location, the traders have set up an international arbitration case against the exchange in Hong Kong. The plaintiff will be represented by New York-based law firm White & Case.
At the time of Binance’s May outage, major cryptocurrencies were experiencing volatility peaks. The first group of traders to come forward claim to have collectively lost more than $20 million. The six investors are from countries that include Ukraine, Australia, France, and the US.
Binance Has in the Past Denies or Barely Compensated Those Who Complained
News outlets at the time had covered a story of a particular trader from Canada who solely lost $6 million. The crypto trader by the name Fawaz Ahmed could not get out of an Ether position on that day where Ethereum saw its biggest one-day decline since May 2020. Ahmed added that the compensation offered by the Binance customer service was “absurdly” low.
Ahmed’s Binance’s May outage story is similar to another of a crypto trader who lost $80,000 trading Binance Leveraged Tokens (BLVT). The trader claims that because of a malfunction on Binance’s API, his algorithmic trading bots failed. Crypto exchange Binance dissociated itself with the incident at first contact.
The trader reached out to Binance for a second time, armed with a screenshot from a tweet of the exchange’s VP of Derivatives Aaron Gang. Gang had claimed that those affected by the May 19 incident should fill out a form, which the Binance customer care team would use to reach out. The Binance customer care team this time offered the victim $18,000 worth of BLVT tokens. However, a few hours later, Binance sent the victim an email that his account was flagged and he had to sell the leveraged token.
Such stories are a few of many, the Binance crypto traders believe. The initial six anticipate that the $20 million they claim will increase once more traders come forward.