If nothing else, Binance sometimes has problems, especially in times of volatility for cryptocurrencies. Encryption suppression<\/p>\n While some companies in the field, such as Coinbase, have sought to engage with regulators, Binance and many others operate outside the scope of established rules.
\nThis can cause irreparable damage to traders’ funds – especially when prices are falling.
\nAnd these losses can reach millions of dollars when investors make risky bets using leverage.
\nBinance recently reduced the maximum leverage that its customers can leverage in futures contracts-financial derivatives.
\nMeanwhile, Changpeng “CZ” Zhao, Binance’s boss, has repeatedly stated that the exchange has no official headquarters.
\nThis makes it extremely difficult for users to take the company to court.
\nA group of traders hopes this will change.
\nWith the help of Liti Capital, a little-known private equity firm that provides litigation financing, nearly 1,000 people are expected to take part in arbitration proceedings in Hong Kong to seek redress from Binance.
\n“This is a milestone for the industry,”<\/strong> <\/em>David Kay, chief investment officer at Liti Capital, told CNBC.
\n“They have no house, no headquarters, no office”.<\/strong><\/em>
\n“The only place Binance can be held accountable is in an international arbitration tribunal in Hong Kong.”<\/strong><\/em>
\nIt is noted that the terms of use of Binance say that any legal dispute can be resolved through arbitration at the International Arbitration Center in Hong Kong.
\nArbitration proceedings, unlike prosecution lawsuits, are aimed at resolving out-of-court disputes.
\nThis makes it even more difficult for the average consumer to claim compensation, as applicants have to pay fees and additional costs – for example, travel to Hong Kong.
\nIndividually, this could return about $ 65,000 to each applicant.
\nTo cover these costs, Liti Capital has promised to fund the complainants with at least $ 5 million.<\/p>\n
\nThis has not gone unnoticed by regulators.
\nTwo major concerns about cryptocurrencies are the lack of protection for consumers and the risk of money laundering and other illegal activities.
\nIn this context, Binance, which was founded by Zhao in China four years ago, recently stated that it is seeking to become a regulated institution, with plans to obtain licenses in several jurisdictions and to set up regional headquarters.
\nIn fact, Zhao appears willing to hand over the baton to someone more experienced.<\/p>\n