By
Chimamanda U. Martha
April 23rd, 2024
A court in Italy has asked Binance to appear in reference to a class-action lawsuit filed by investors seeking redress for several outages.
Binance is due to appear in court in Italy on Thursday to answer a class-action lawsuit filed against the exchange. A group of investors accused the cryptocurrency exchange of being responsible for losses incurred last year at crucial trading times. The investors are seeking damages, alleging that the platform’s outages caused the trading loss.
In November 2021, a group of Italian and international Binance users sued Binance and its CEO Changpeng Zhao. The accusers stated that the Binance platform went offline multiple times and locked users out of the exchange. The lawsuit noted that the outages prevented the investors from changing their trading positions, leading to losses worth “tens of millions”.
The suit also alleges that allowing Italians to trade leveraged futures on the Binance platform violates the country’s financial regulations. According to Francesco Dagnino, the managing director of Milan-based law firm Lexia Avvocati:
“It is absolutely clear that when you are selling a future, especially with that type of leverage, it doesn’t matter what the underlying asset is, it’s always a derivative and always a financial product.”
Dagnino said the case involves at least 100 investors, but more will join.
Italian Authorities Have Not Authorized Binance for Investments
The Lexia Avvocati managing director also said that Binance offered to reimburse affected investors. However, the proposed amount was reportedly insignificant. In addition, Dagnino stated that according to the investors, even those who accepted the compensation offers are yet to receive anything. In July 2021, Italy’s financial regulator declared Binance an unauthorized investment services provider.
Last year, a group of Italian Binance users also approached the Swiss Blockchain Consortium seeking advice on recovering losses tied to outages. The director of the Consortium, Michele Ficara Manganelli, said Italians and European Binance investors seeking compensation could join the class-action suit. At the moment, the Consortium website’s homepage features a direct link to joining the lawsuit.
Interestingly, Italian authorities approved Binance’s registration and inclusion in a maintained list of crypto service providers earlier this year. However, the registration does not suggest compliance with local regulations. The listing only aids in subjecting firms to Italian anti-money laundering standards.
Binance Yet to Comment on the Lawsuit Amidst Efforts to Become Validated in Italy
Binance has not yet joined the proceeding, meaning it has not filed any defense statements. Dagnino also suggests that the exchange might not show up at the hearing. However, there is a chance that the company’s recent effort to become a registered virtual asset provider in Italy will prompt representatives to show up. Generally, Binance’s direct participation is not necessary to the judge’s decision, as a ruling is possible without the exchange’s presence.
In other news, Binance recently announced the launch of its inaugural soul-bound token on the BNB smart chain. The new Binance Account Bound (BAB) token will be a proof of identity for Binance users. This initiative would only be available to users that have satisfied the KYC requirements.