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Crypto traders seek payback after Binance service outage

traders seek damages from binance

Crypto investors affected by the service outage of cryptocurrency exchange Binance on May 19, 2021, will reportedly participate in the legal proceedings against the exchange after losing the millions worth of assets. The freeze affected over 700 people and some reported losses of up to $12 million. 

According to CNBC, a spokesperson for Binance stated: ‘Our policy is fair in that we compensate users who experienced actual trading losses due to our system’s issues’, adding, ‘We do not cover hypothetical ‘what could have been’ situations such as unrealized profits’. 

Binance wasn’t the only site hit by the freeze. American crypto exchange Coinbase was reportedly down for more than an hour due to network congestion caused by a large-scale selloff that jammed blockchain transactions and depleted reserves. Some traders on Binance have had their entire accounts emptied by the time the exchange went back online.

A representative of Binance told The Verge, a news website, that almost all crypto exchanges were affected by the temporary outage ‘due to extreme market volatility’. 

‘At Binance, we took immediate steps to engage with users affected by the outage, and we worked quickly to restore trading’, the representative stated.

One problem that the affected traders are currently facing is Binance’s lack of official headquarters, which is difficult for them to determine how and where to take the firm to court.

Swiss private equity firm Liti Capital is working with the traders and has committed at least $5 million funds for the Hong Kong-based international arbitration case of the investors against Binance. 

The firm is hoping users involved in the outage will come forward and participate in the arbitration suit to decrease the court costs and reclaim lost assets. 

‘One way or another this case is going to end up being landmark’, stated Liti Capital executive chair, David Kay. Adding, ‘We are going to find out what limits if any, there are on what these huge organisations can do’. 

Additionally, Kay expressed his hopes for Binance and the crypto industry to ‘be successful’, stating that ‘some basic rules’ have to be set. Binance has so far refrained to comment on the potential legal case.

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