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Binance legal action sees thousands of claimants join ‘landmark’ proceedings

Binance legal action sees thousands of claimants join ‘landmark’ proceedings

Thousands of disgruntled Binance customers have registered claims against the trading platform following the outages it faced in May 2021. Earlier this year, Liti Capital announced it is financing the proceedings to be brought in the Hong Kong International Arbitration Centre, with claimants being represented by White & Case LLP.

To date, more than 2,300 claimants have registered on Binanceclaim.com, and this number is increasing daily, according to Liti Capital's executive chairman and CIO David Kay.

In a recent press release, Kay, who sits on the Binance Claim Steering Committee, added that "last week we saw more than 1,000 claimants register, potentially making this the largest international consumer arbitration in history and a landmark case for the crypto industry."

In conversation with Finextra earlier this year, Kay explained that there are a number of factors which make the case unique, first and foremost being that Binance is really the first company to succeed on such a scale without being registered or ‘belonging’ to a state. It will be the first international arbitration to grapple with the issue of a ‘stateless company’ and will be the largest consumer group arbitration in history.

Kay told Finextra: “Multinationals were the first entities to live in multiple states, but they still had headquarters, they had homes and importantly they had places where they could be sued. Binance has succeeded in becoming a behemoth while being ‘nowhere’ - they have no headquarters so they are regulated by no-one.”

The press release states that a letter was recently sent to Binance on behalf of the Binance Claim Steering Committee, requesting that the platform compensate the increasingly number of claimants who found themselves locked-out and unable to trade on the exchange during the infamous crypto-plunge on May 19 this year.

The plunge followed a string of negative headlines and regulatory crackdown on crypto-related activity in China, resulting in Bitcoin’s dollar price dropping by over 30% while Ethereum’s fell by over 45%. This was not only one of the largest one-day price declines in cryptocurrency history, but also one of the largest-ever liquidations of traders’ positions. The entire platform crashed at 13.30 UTC, re-opening just after 15.00 UTC by which time crypto prices had recovered to pre-crash levels and short positions were no longer in the money.

If Binance refuses to settle the case will proceed before the Hong Kong International Arbitration Centre.

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