Binance, the world’s largest cryptocurrency exchange, experienced a major outage in May when the price of bitcoin fell sharply. Some users, who were unable to access their account at the time, are reportedly considering legal action.
On May 19, 2021, the price of bitcoin experienced a sudden and sharp drop. While it was selling at midnight at 35,000 euros, at 3 pm, the price had plunged to 27,000 euros. This more than 20% decrease in the value of bitcoin, in just a few hours, panicked markets and bitcoin owners, who sought to sell their holdings while the price was still relatively high.
But, for many Binance users, it was impossible to sell on May 19, reports the Wall Street Journal. « During one hour, explains the American newspaper, Binance, the world’s largest cryptocurrency exchange, was inaccessible as the price of bitcoin and other cryptocurrencies plummeted. »
If the price of bitcoin finally started to rise again a few hours later, for many users of the platform, it was already too late. Some of them lost tens of thousands of dollars, says the Wall Street Journal, which was able to interview Binance users. And now they are demanding redress.
Among Binance users interviewed by the Wall Street Journal, we find Anand Singhal, who says he lost nearly 74,000 euros. Anand, who had placed a bet on rising markets, was unable to access his account on Binance for over an hour as prices fell and the platform took from his account the sums he had wagered – without being able to do anything about it.
Contacted by the Wall Street Journal reporters, a Binance spokesperson explained the inaccessibility of the platform by the high demand and the very large number of connections at that time, thus creating a ” bottleneck ». « We took immediate action to contact users affected by this issue and provide them with compensation, and we will be happy to assist anyone who has encountered this issue. “, He also indicated.
But it is precisely the compensation proposals that pose a problem for many people affected by the Binance outage. Anand Singhal explained to the Wall Street Journal that Binance had contacted a friend of his to offer him compensation: a ” upgrade Of their account to access Binance’s VIP sales platform for free for three months. An offer that may not only seem ridiculous in view of the sums lost by some members, but which, above all, had one condition: in exchange for access to the VIP platform, everyone had to agree to give up forever filing a complaint. against Binance and seek redress. The platform would have, moreover, threatened to withdraw this offer if the person made public the proposal which had been made to him.
Collective action in preparation in France
Anand Singhal, who told the Wall Street Journal that he was ” traumatized By history, also indicated his intention to obtain redress. He explains that he joined a group of more than 700 traders, who are working with a lawyer in France to be reimbursed for their losses. Several attorneys also represent a group of people who suffered losses in Italy, and have sent letters to Binance at 11 different addresses in Europe, the Wall Street Journal reports.
Binance, which attracts users from all over the world, does not have an easily locatable physical presence, nor an official head office – the founder of the platform, Zhao Changpeng, said that Binance did not have an official address because bitcoin didn’t have one either. And the fact that Binance does not have a real physical presence is one of the points the newspaper raises. Any attempt to obtain redress is made extremely complex.
« Binance has made it very difficult to hold it to account, especially for ordinary users of the platform. », Aija Lejniece, the lawyer who advises the group of plaintiffs in France, explained to the Wall Street Journal. She also told reporters at The Wall Street Journal that she hoped that group action would achieve better results, and that group members could achieve ” full compensation for their losses ».
In addition to the class action being considered in France and the demands for redress from Italian lawyers, Binance is currently experiencing a lot of problems, all over the world. The UK financial authorities recently expressed their desire to ban all or part of the platform’s activities in their country, and the platform is under investigation in the United States and Thailand. In Japan, Canada and Germany, the platform is also accused of exercising without authorization.
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Source: Numerama by www.numerama.com.
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