Binance’s French subsidiary, Binance France, has been sued by fifteen investors who claim that the cryptocurrency giant violated local regulations by misleading customers.
The French subsidiary of Binance has been accused of violating France’s laws by promoting and distributing its cryptocurrency services before obtaining proper authorization. The plaintiffs recorded and documented their dealings on the crypto exchange, showing Binance’s marketing materials for its French users. According to the plaintiffs, these were done right before Binance gained authorized registry with local regulatory bodies.
The lawsuit was filed on December 14, formalizing complaints against Binance France which included allegations of securities law violations for the sale of TerraUSD and its sister cryptocurrency Terra (LUNC). The lawsuit claims that Binance was selling these digital assets in violation of law, and buyers were not warned or sufficiently informed, through advertising materials, about the risks involved in their purchases.
The lawsuit outlines Binance’s unlawful sale of the highly debated algorithmic stablecoin and other tokens without informing buyers regarding potential risks. In their complaint, the plaintiffs assert that Binance and its senior management were aware of the downfall of a project prior to marketing it globally. Consequently, they have allegedly lost over 2.4 million euros due to believing in false claims that this token was backed by US dollars.
Investors who relied on Binance to purchase UST were sorely disappointed, as they quickly found out that the exchange was far from ‘safe,’ ‘stable,’ and/or ‘fiat-backed.’ Furthermore, French investors have expressed their grievances in claiming that Binance acted more like an “actual seller” when it came to any transactions taking place on its platform; rather than simply facilitating a direct exchange between those parties involved, it went so far as to actually credit or debit each individual’s respective accounts.
Upon inquiry, Binance France declared that they had not been notified of any civil or criminal proceedings. Additionally, the entity confirmed that no promotional activities were undertaken in France prior to receiving registration from French 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,” Binance stated.
It was only earlier in May this year that Binance France was able to secure a digital asset service provider with the country’s regulators. The license provides the exchange as a Paris-based business to provide traders with a premier cryptocurrency platform while also serving as a custodian for businesses linked to crypto. This, despite the fact that Binance has faced immense regulatory pressure from UK and other European authorities this year, it is still determined to expand into Europe.
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