Liti Capital, a Swiss litigation finance group, has reportedly promised to provide the minimum funding of $5 million for litigation between Binance’s customers and the cryptocurrency exchange. According to CNBC, hundreds of crypto traders are set to take legal actions to seek damages for funds lost during a major outage on Binance.
The report notes that a New York-based law firm, White & Case will be in charge of the case, representing the traders. “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,” David Kay, Executive Chairman at Liti Capital, told the Financial Times.
In one of the testimonies collected by CNBC, Ahmed, a 33-year-old full-time crypto trader, claimed to have lost around $6 million during the outage that took place on May 19. “This loss was not fair. This is something which was out of my control,” the trader said who also blamed Binance’s customer support. In addition, he highlighted that the outage lasted around one hour, the period of time where he could not exit his position.
Ready to kick-off your Trading Game with Manchester United?Go to article >>
Traders Were Not Reportedly Able to Exit Their Positions
In fact, that day, both Bitcoin (BTC) and Ethereum (ETH) plummeted. On such a day, the crypto market lost $1 trillion in value. In regards to legal action, Binance said it could not comment on pending legal matters. Now, the challenge for the claimants will be the lack of headquarters of Binance, as its CEO, Changpeng ‘CZ’ Zhao, previously stated that the firm did not have one.
However, the upcoming legal proceedings are due to take place in Hong Kong. “The only place where Binance has said they have jurisdiction is in a Hong Kong international arbitration court. This will be the largest consumer international arbitration in history,” Kay commented.