Binance France and its global parent were sued by fifteen investors who claim the cryptocurrency giant flouted local regulations with misleading commercial practices.
The complaint was filed on December 14 alleging that Binance’s French subsidiary had begun promoting and distributing its cryptocurrency services in the country before obtaining proper authorization.
The plaintiffs shared screenshots showing Binance’s marketing materials in French prior to registering its business with local regulators, including a Telegram channel dubbed “Binance French.”
Binance France is also facing charges for the sale of TerraUSD (USTC) and its sister cryptocurrency Terra (LUNC). The lawsuit lists the controversial algorithmic stablecoin and other tokens that it claims are securities Binance was selling in violation of law, and the buyers were not warned of the risks involved in their purchases.
The compliant further alleges that Binance and its senior management deliberately marketed the troubled project because its global parent had previously invested in it. As a result, the plaintiffs allegedly lost over 2.4 million euros while the exchange was advertising the collapsed token as US dollar-backed.
Investors who purchased UST on Binance were wiped out, learning quickly that, contrary to Binance’s advertisements, UST was not ‘safe,’ ‘stable,’ or ‘fiat-backed, the compliant reads.
In addition, French investors claim that Binance was the “actual seller” when an exchange takes place, crediting and debiting the parties involved in the transaction in its accounts, rather than facilitating a direct exchange between those parties.
In response, Binance France said it didn’t not receive any notifications relating to criminal or civil proceedings. It also confirmed that it never carried out any promotional communications in France before receiving registration from the country’s authorities.
“Binance did not promote in France before being allowed to do so. Telegram groups are global community forums, which any Telegram user can create or join voluntarily,” the exchange said in a blog post.
Binance France secured a digital asset service provider registration in May, which enables its Paris-based business to offer trading and custody services for cryptocurrencies on its platform. It also helped boost Binance’s ambitions in Europe after it has been on shaky ground this year, with regulators in the UK and elsewhere putting the exchange under intense scrutiny.
The world’s largest cryptocurrency exchange by trading volume was reportedly on the hunt for new headquarters in France. For this purpose, they financed a 100 million euro initiative together with a local nonprofit entity to support the blockchain and cryptocurrency sector in France.