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| Binance is facing legal issues due to outage |
A group of dissatisfied investors has filed a formal complaint against cryptocurrency platform Binance, which allegedly caused millions of losses due to an unexpected failure of the platform earlier this year.
The case will be considered by the Court of International Commercial Arbitration. This is the largest lawsuit ever filed by an investor against a cryptocurrency platform, and it is also an important test for the speculative rights of investors in the cryptocurrency market.
The problem stemmed from a widespread power outage on May 19, which coincided with a sharp drop in the price of Bitcoin.
Binance is not the only platform affected, as massive sales lead to disruption of blockchain transactions and loss of funds. However, the platform's complex financial products made losses particularly severe.
When the service was restored, many future and leveraged traders on the platform saw their accounts automatically and completely empty.
The trader said, if the platform can close the order, it will be possible to sell before the wallet becomes empty.
More than 700 people have been affected by the closure. The first participants in the new program lost up to 12 million dollars.
If the lawsuit is successful, the platform will have to pay those losses out of pocket and take more responsibility for future investor claims.
Finding a place to hear the case is a challenge. The platform does not have a registered office as it can be located in any particular jurisdiction. This thwarted previous attempts to bring a classic lawsuit against the company.
Conversely, the company's terms of service require that all legal proceedings be handled by the Hong Kong Center for International Arbitration, a court-like institution commonly used to resolve cross-border commercial disputes.
Binance is facing legal issues due to outage
The plaintiff hopes to gather all those affected by the statute's disruption in a single arbitration proceeding. This reduces legal costs and gives investors the opportunity to get the money back.
The platform was founded in 2017 and has been a huge success as a cryptocurrency platform. It has become an important place for the most complex financial transactions in the cryptocurrency market.
In addition, the platform claims to process over a million transactions per second and generate billions of dollars in user fees.
This success is accompanied by important organizational challenges. The platform is currently under investigation by the US Department of Justice and the Internal Revenue Service. Officially banned from working in the UK.