Binance France and Binance Holdings Limited are being sued for alleged fraudulent concealment and misleading commercial practises.
According to local media reports, Binance France and its parent company Binance Holdings Limited are being sued by 15 French investors for alleged misleading commercial practises and fraudulent concealment.
Plaintiffs claimed in a complaint filed on December 14 that Binance violated French laws by advertising and distributing crypto services before receiving registration from the country’s authorities. According to Cointelegraph, the Autorité des marchés financiers in France has granted Binance a licence as a digital asset provider in May 2022. The licence allowed the crypto exchange to provide services like asset custody and cryptocurrency trading.
The complaint reportedly contains screenshots showing Binance’s social media activity prior to its licence, including a Telegram channel dubbed “Binance French”. The plaintiffs also claim to have lost over 2.4 million euros as a result of the TerraUSD (UST) debacle, despite Binance advertising the token as US dollar-backed.
Related: France may require cryptocurrency exchanges to obtain licences.
Binance France responded to questions about the case in a blog post. According to it, the company did not conduct any promotional communications in France during the relevant period, and stated that “Telegram groups are global community forums,” allowing users to create and join channels on their own terms.
Binance also addressed concerns about Terra stablecoin advertising in the country. The company stated that its communication portrays staking with Binance as “safe, rather than the underlying tokens.” The exchange also stated that it always includes market risk warnings for crypto products and that its descriptions have been strengthened.
According to Cointelegraph, a series of dramatic events in May 2022 resulted in an unprecedented drop in the price of the LUNA token and its associated stablecoin TerraUSD (UST), which was designed to maintain algorithmic parity with the US dollar but lost its peg and fell below $0.30.