A group of 700+ claimants work with litigation finance provider Liti Capital to seek hundreds of millions of dollars in damages against the world’s biggest crypto exchange in what will be the first case of its kind.
Geneva, Switzerland — August 19, 2021: Liti Capital SA, a Swiss-based litigation funding provider that has opened up private equity investing to the masses through blockchain technology, has been appointed by a group of claimants seeking damages against Binance, the world’s largest cryptocurrency exchange.
Liti Capital is spearheading the arbitration lawsuit on behalf of a group of traders who lost on 19 May 2021 when Binance inexplicably froze their accounts for approximately one hour.
As a result, the trading accounts (including futures options) of at least 700 known traders were effectively untradable for multiple hours. We believe that thousands of traders were affected, and that those traders suffered more than one hundred million dollars of damages.
Binances failures however, are not just isolated to 19 May 2021; Binance has failed to meet its obligation to its community on many occasions since October 2020.
The total loss incurred across all 700+ claimants is expected to be well in excess of one hundred million US dollars; in fact, the six Steering and Advisory Committee members alone have a collective claim in excess of $20m USD.
It is believed that this case — the first ever group action case in the crypto sector — will be a landmark event in defining how organisations operating in the sector behave and treat their customers.
“Crypto and blockchain are the future but they’ve just got to get cleaned up. It is the Wild West out there. Companies like Binance — the largest, most influential players — have to be brought to account,” says David Kay, CEO of Liti Capital.
The traders caught up in the incident allege that Binance liquidated their positions as a result of the exchange freezing causing millions of dollars worth of losses. Several traders have pursued the exchange for compensation but so far have been unsuccessful.
Under Binance’s terms and conditions, users seeking compensation are required to file disputes with the Hong Kong International Arbitration Centre, a costly step for an individual.
“Binance has made it difficult — not impossible, but difficult — for the average consumer to seek recourse,” says Aija Lejniece, an arbitration attorney who has been working with the group of traders. “There’s no surveillance [of Binance’s activities], nothing to control what they’re doing.”
Liti Capital will provide litigation finance to the Binance Arbitration Case, meaning claimants don’t have to pay any upfront costs to bring the case to court. White & Case LLP is coordinating legal efforts with an advisory team on behalf of all plaintiffs.
This includes covering the cost of White & Case, the lawyers that will represent this group, any expert witnesses, arbitration court fees and every other cost pertaining to the case. Liti Capital will cover all costs.
“Given the unconscionable terms of the user agreement and the costs of arbitration, we don’t know if anyone in our group — or anyone in their system — has paid enough [in fees to Binance] to make money even if they win their case,” says Kay.
Litigation Finance is a means whereby a third party pays for all costs for the plaintiffs in exchange of a minority percentage of the award, should one be given. Liti Capital crowdfunds legal fees using the LITI token to raise capital to buy asset ownership in legal cases they believe they can win and collect judgments on.
“Our strong view is that Binance went way further than what they were allowed to under the law,” says Kay.
Claimants who wish to take part in the case should visit www.binancecase.com to register their interest.
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About Liti Capital
Liti Capital is bringing the litigation asset class to everyone through Blockchain technology with LITI tokens, an equity token that is a share of stock in Liti Capital SA. The launch of LITI and wLITI tokens allows any investor to engage in the high-performing litigation finance market previously only available to elite investors.