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Binance Outage Lawsuit Overview:
- Who: Nearly 1,000 cryptocurrency investors are expected to take part in litigation against Binance over an outage the trading platform experienced.
- Why: The investors were left unable to change their positions for about an hour due to the outage. Bitcoin and ethereum posted their biggest one-day drops since March 2020 on the day of the outage.
- Where: The arbitration proceedings to seek damages from Binance are taking place in Hong Kong.
Hundreds of cryptocurrency investors are expected to take part in legal proceedings against the online trading platform Binance, seeking damages for money they say they lost when the platform experienced a major outage.
According to Liti Capital, a Swiss private equity firm providing litigation financing, nearly 1,000 people are expected to join arbitration proceedings in Hong Kong to seek damages from Binance, CNBC reported.
“This is a landmark case for the industry,” Liti Capital chief investment officer David Kay said.
Binance, the world’s largest digital currency exchange by trading volume, went down on May 19, leaving traders unable to change their positions for about an hour.
That day, bitcoin and ethereum—some of the world’s most highly-traded cryptocurrencies— posted their biggest one-day drops since March 2020. The entire crypto market lost roughly $1 trillion in value that day.
Traders who invest in bitcoin and ethereum were therefore unable to sell when they saw the prices start to drop. Canadian cryptocurrency trader Fawaz Ahmed told CNBC he lost about $6 million that day.
“This loss was not fair,” Ahmed told CNBC. “This is something which was out of my control.”
He is one of the traders taking legal action against Binance to recover damages. Ahmed said he was given a too-low compensation offer by the company.
However, Binance told CNBC its compensation policy is fair in that it compensates users who “experienced actual trading losses due to our system’s issues.”
“We do not cover hypothetical ‘what could have been’ situations such as unrealized profits.”
Binance has experienced several outages over the years, CNBC reported, particularly in times of heightened volatility. Coinbase has experienced similar outages in the past.
Earlier this month, a pair of cryptocurrency users filed a class action lawsuit alleging their Coinbase wallets were either hacked or frozen without warning, and that their pleas to release their accounts so they could access funds went unheeded.
Have you experienced a trading platform outage? Let us know your experience in the comments!
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One thought on Crypto Traders to Sue Binance for Losses Amid Major Outage in May
Thanks Jim, He also helped me as well