Why angry investors are trying to sue Binance

Imagine if you won the lottery only to find out that your winning ticket earns you nothing but a fine. You would probably be furious.

That’s what happened to thousands of cryptocurrency traders who invested in Binance products that ended up behaving unexpectedly in May.

Some disgruntled investors are now taking legal action against the platform. These events – and how Binance has responded to them – have exposed chinks in the exchange’s armor and hurt its credibility, even though it’s unclear how long the impact will last.

The incident surprised many. After all, Binance is the world’s most widely used crypto exchange, with tens of billions of US dollars flowing through it every day. And much of the credit goes to its stellar reputation in the crypto world.

What is Binance and why is it so popular?

Founded in July 2017 by Changpeng Zhao, Binance was initially based in China but is now domiciled in the Cayman Islands.

How did the crypto exchange become so popular? Firstly, the platform offers traders a wide range of cryptocurrencies to choose from. It currently has over 500 altcoins in its arsenal.

Secondly, its trading fees are among the lowest in the world, making it attractive and affordable for anyone looking to enter the crypto space.

Thirdly, Binance’s high trading volume leads to less volatility in prices for traders.

Finally, Binance has a reputation of being a trusted and safe exchange due to the numerous steps it has taken to protect users’ accounts. It has implemented security features like universal two-factor authentication and deters hackers by keeping users’ cryptocurrencies in cold storage, an offline wallet that is not connected to the internet.

Trouble at Binance

However, Binance’s huge popularity has also attracted greater scrutiny from governments and regulators across the globe. US authorities are investigating the exchange as part of a wider probe into money laundering activity.

Meanwhile, the Monetary Authority of Singapore (MAS) has placed Binance on its alert list for possibly giving investors the false impression that it is licensed or regulated by the central bank, The Business Times reported.

MAS also ordered Binance to stop providing payment services to Singapore residents, adding that the exchange may be in violation of the Payment Services Act by doing so without a license.

Is Binance to blame?

How can investors protect themselves?