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Hundreds of cryptocurrency traders to sue Binance for millions lost due to outage
Hundreds of cryptocurrency investors are expected to join arbitration proceedings against Binance to recover losses caused by the exchange's outage on May 19.
That day, bitcoin and ethereum posted their highest one-day drops since March 2020 with the entire crypto market losing roughly $1 trillion in value.
Due to the outage in Binance, traders were unable to exit their positions.
A spokesperson said that Binance’s will compensate users who suffered trading losses due to their system’s issues.
But the spokesperson added that they would not cover those falling under hypothetical situations such as unrealized profits.
Losses can reach millions of dollars when investors make risky bets using leverage to augment trades, which is often done by investors on Binance.
Binance recently cut the maximum leverage customers can take on futures to 20 times from a previous limit of 125 times.
As Binance has no official headquarters, it is difficult for investors to figure out the venue of legal proceedings.
But with the help of Swiss private equity firm Liti Capital, which provides litigation financing, nearly 1,000 people are expected to join arbitration proceedings in Hong Kong against Binance.
David Kay, a chief investment officer of Liti Capital, noted that Binance said that only a Hong Kong international arbitration court has jurisdiction in it.