Until the end, 2022 will remain a dark year for the crypto-asset industry. After the crash of the stablecoin Terra, which led to the bankruptcy of the Three Arrow Capital fund and platforms such as Celsius Network and BlockFi, and more recently the collapse of the FTX crypto-asset exchange platform, it is now the turn of Binance to find themselves in the eye of the storm.
Indeed, fifteen French investors have filed a complaint with the Paris prosecutor’s office against the first global exchange platform in the sector, accusing it of having engaged in deceptive commercial practices and of having violated French regulations governing service providers. Digital Asset Services (PSAN), reports Mediapart. In detail, it is the French branch, headed by David Prinçay (ex-Stripe), and Binance Holdings Ltd, a company domiciled in the Cayman Islands and represented by its founder Changpeng Zhao, known as CZ, who are targeted in this complaint registered on December 14 last.
According to their lawyers, Baptiste Bonhomme and Etienne de Dreuille, the plaintiffs, aged 25 to 55, suffered financial damage amounting to nearly 2.5 million euros, from May 7, in full crypto market collapse. It was during this period that the stablecoin of the Terra ecosystem, which had lured these Binance users, had suddenly collapsed, causing investors to lose 40 billion dollars and more than 500 billion on the cryptocurrency market in only a week. “All the investors were left with nothing, without any guarantees”while Binance claimed the opposite, assure the two investor representatives.
Binance accused of having practiced in France before the green light from the AMF
Beyond having presented such investments as being “guaranteed”, which was not the case in fact, the platform is accused by the plaintiffs of not having complied with French regulations, by deploying and promoting its services in France when it does not was not yet allowed. Since the Pacte law of May 2019, digital asset service providers (PSAN) are required to apply for authorization from the Autorité des marchés financiers (AMF) to carry out their activity on French territory. And if Binance did indeed obtain the blessing of the AMF in May 2022, the platform did not wait for this green light to market its services and promote them after French users, according to the plaintiffs’ lawyers. The latter claim that Binance communicated via the French version of its website, its social networks and even a channel on Telegram, Binance French, presented as the official group of the platform.
Faced with these accusations, Binance reacted through a press release to answer all the questions raised by the journalist from Mediapart. Categorically, the platform disputes the facts of which it is accused. “Binance did not promote in France before being allowed to do so”, she assures. The world leader in crypto-asset exchanges is also brushing aside a potential boost from Stéphanie Cabossioras, an AMF defector, who joined Binance to become the legal director of the French branch. The latter notably contributed to the creation of the PSAN status. But Binance rules out any form of collusion: “It should be noted that Stéphanie Cabossioras was not in charge of Binance’s registration dossier when she previously worked at the AMF. The Chairman of the AMF reviewed and approved his hiring by Binance after a thorough review to confirm that there were no conflicts of interest or ethical issues.” It remains to be seen whether the Paris prosecutor’s office will also hear it that way.