Binance France and its parent company, Binance Holdings Limited, are being sued by 15 investors in France over allegations of misleading commercial practices and fraudulent concealment.
The plaintiffs, who filed a complaint on December 14, claim that Binance violated French laws by advertising and distributing cryptocurrency services without first obtaining registration from the country’s authorities.
Binance was granted a license by France’s financial market regulator, the Autorité des marchés financiers, in May 2022 to offer services such as asset custody and cryptocurrency trading.
The complaint reportedly includes screenshots of Binance’s social media activity prior to receiving its license, including a Telegram channel called “Binance French.”
The plaintiffs also claim to have lost over 2.4 million euros following the collapse of TerraUSD (UST), which Binance had advertised as being backed by the US dollar.
In a blog post, Binance France responded to questions about the lawsuit. The company stated that it did not conduct any promotional communications in France during the relevant period and that Telegram groups are global community forums where users can join channels voluntarily.
Binance also addressed questions about its advertising of the Terra stablecoin in France, stating that its communication presents staking with Binance as “safe,” and not the underlying tokens.
The exchange also noted that it always includes market risk warnings for cryptocurrency products and has strengthened its descriptions.
As previously reported, a series of events in May 2022 led to a dramatic decline 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 plummeted to below $0.30.