Hundreds of Binance users are seeking damages for money they lost during major service outages.
A growing group of Binance traders is pursuing the largest crypto exchange in the world over losses suffered during a service outage earlier this year. The group has taken the next step in its quest for compensation by securing financial backing to fight the exchange in court.
According to the Financial Times, Swiss litigation finance firm Liti Capital has stepped up and pledged no less than $5 million to the group. The $5 million will fund an international arbitration case against Binance in Hong Kong. Liti Captial has enlisted the help of New York-based law firm White & Case to represent the victims.
Initially, six investors from Australia, France, Ukraine, and the United States claimed that Binance owes them a total in excess of $20 million. The group stated that its also looking to include “several hundred more traders” to join in the fight against Binance.
Executive Chair at Liti Capital David Kay said that “One way or another this case is going to end up being a landmark. We are going to find out what limits if any, there are on what these huge organizations can and can’t do.” Kay is referring to the fact that Binance operates via a confusing global network of entwined legal entities.
Binance outage causes significant loss
The international arbitration case stems from losses that traders suffered on May 19, 2021, when the crypto market crashed in the wake of growing Chinese regulations. As this happened, Binance happened to suffer a global outage on its futures platform at the same time. The outage allowed for traders to make “supercharged bets,” on several digital tokens via high levels of borrowing. It was these liquidations in question that are being blamed for the asset losses by the alleged victims.
A Japanese trader who chose to remain anonymous told the Financial Times that, “Whatever button I pressed, I was met with glitches,” adding that “I went numb seeing myself lose $74,000.”
Aija Lejniece, a Parisian lawyer who organized the group after a friend became a victim, said, “there is a profound sense of injustice among the group.”