Binance Faces UK Lawsuit Over Bribery Allegations

The cryptocurrency sector has recently been rocked by controversies involving prominent players, raising questions about governance and transparency within the industry. Binance, the world’s largest crypto exchange, faces allegations of bribery and unfair dismissal in a UK lawsuit, while Ethereum layer-2 network Scroll is under fire for its handling of a controversial token airdrop. 

Former Binance Employee Files Lawsuit Alleging Bribery and Unfair Dismissal

A former senior employee of Binance, the world’s largest cryptocurrency exchange by trading volume, has reportedly filed a lawsuit against the company’s United Kingdom division. The case brings forward serious allegations of bribery and unfair dismissal, marking yet another legal hurdle for the embattled crypto giant.

According to a Bloomberg report published on Nov. 28, Amrita Srivastava, a former Binance employee, filed the lawsuit in a UK court. Srivastava claims that an unnamed colleague at Binance solicited bribes from a customer under the pretext of offering “consultative services.” She reported the incident to Binance’s management in April 2023 but alleges that she was dismissed from her role a month later as a result of her actions.

Srivastava expressed her frustration and dismay over the handling of the incident. “I was not prepared to look the other way when someone had defrauded a customer and yet was still a part of the team. Some things are just right and wrong, and asking for a bribe and defrauding a customer was not a gray area — it is most definitely wrong,” Srivastava said, as quoted in the report.

Binance has pushed back against the claims. A spokesperson for the exchange stated that the bribery allegations were already known to the company and that Srivastava’s dismissal was due to “poor performance.” However, the timing of the dismissal raises questions, as it occurred shortly after Srivastava brought the matter to light.

The outcome of the lawsuit remains uncertain as it progresses through the UK judicial system. Under UK law, employees who prove unfair dismissal could receive compensation of up to approximately $150,000. However, whistleblowers are afforded greater legal protections, and compensation for such cases can be unlimited.

This lawsuit not only sheds some light on potential internal disputes at Binance but also raises broader concerns about corporate governance within the cryptocurrency industry. If proven, the allegations of bribery could further erode confidence in Binance’s operations, which have already come under intense regulatory scrutiny worldwide.

Legal Troubles in the United States

The UK lawsuit adds to Binance’s growing list of legal challenges, particularly in the United States. Since June 2023, the exchange has been embroiled in a high-profile lawsuit with the US Securities and Exchange Commission (SEC). The SEC accused Binance of offering unregistered securities and other regulatory violations.

In a separate US legal case, Binance agreed to a settlement with federal authorities in November 2023. As part of the agreement, the company paid $4.3 billion in penalties, and its then-CEO Changpeng Zhao (commonly known as “CZ”) stepped down. Zhao also pled guilty to one felony charge, served a four-month prison sentence, and was released in September 2024.

The settlement marked a turning point for Binance, which is working to rebuild trust with regulators and customers. However, the company’s legal entanglements continue to overshadow its operations and raise questions about its long-term viability in an increasingly regulated crypto market.

The allegations of bribery and whistleblower retaliation come at a time when the cryptocurrency industry is under intense regulatory scrutiny worldwide. Governments and regulators have raised concerns about the lack of transparency, money laundering risks, and consumer protections within the sector. High-profile cases like Binance’s amplify calls for stricter oversight and governance reforms.

For Binance, the lawsuit could further damage its reputation and complicate its efforts to navigate ongoing legal battles. The company is also likely to face heightened scrutiny from UK regulators, who may view the case as indicative of broader compliance issues within the exchange.

As the legal proceedings unfold, the case serves as an example of the challenges that crypto companies face in balancing rapid growth with compliance and governance. For Binance, a resolution to this lawsuit will be critical not only for its UK operations but also for its global reputation. If Srivastava’s claims are substantiated, the case could set a precedent for holding crypto firms accountable for unethical practices internally and externally.

Meanwhile, the broader cryptocurrency industry will likely keep a close eye on the outcome, as it could influence regulatory approaches to whistleblower protections and corporate accountability in the sector. For Binance, the stakes are higher than ever as it attempts to recover from a series of legal and reputational setbacks.

Binance is not the only company to come under fire recently. The Ethereum layer-2 network Scroll has found itself under scrutiny following accusations of misconduct during its October token launch. In a Nov. 28 post on X, Scroll co-founder and CEO Sandy Peng dismissed claims that the network orchestrated a “predatory” token launch as “wild” and reaffirmed the project’s commitment to transparency and community engagement.

On Oct. 22, Scroll launched its native token, SCR, via a highly anticipated airdrop. However, the event quickly became a flashpoint for controversy. The token’s price plummeted by 32% on its first day of trading, leading to accusations that members of the Scroll team had engaged in token dumping. The uproar stemmed from large SCR allocations granted to a small number of whale wallets, leaving many airdrop participants feeling shortchanged.

In a Nov. 27 X post, Rushi Manche, co-founder of rival blockchain developer Movement Labs, did not hold back, describing Scroll as “probably one of the worst actors in the space” and alleging that the project “literally airdropped to [team members’] wallets and dumped.”

Sandy Peng took to the platform to refute these allegations and provide context for the token launch. Peng clarified that Scroll had allocated only a “negligible” amount of Marks — points used to determine airdrop allocations — to its own wallets. Instead, the majority of SCR tokens distributed to the team were reportedly used to seed decentralized exchanges (DEXs) with liquidity to facilitate trading.

“In hindsight, removing Marks for clarity would’ve been better. Lesson learned,” Peng wrote. She also emphasized that Scroll has been reflecting on community feedback and is working to address these concerns through its follow-on airdrop, dubbed “Session 2,” which was announced in October.

Scroll also announced a restructuring effort as part of its next development phase, which includes some team members transitioning out of the project. The company stressed that the SCR token remains central to its governance and decentralization goals.

Scroll initially outlined its tokenomics in October, detailing a total supply of 1 billion SCR. The allocation breakdown includes 15% for airdrops, 35% for ecosystem growth, 17% for investors, 10% for the Scroll Foundation, and 23% for contributors. The SCR token is intended to serve as a governance mechanism for the protocol, with plans for it to evolve into a utility token as Scroll becomes more decentralized.

Despite the controversies, Scroll reiterated its long-term vision as a zero-knowledge (ZK) rollup. Competing against layer-2 solutions such as ZKsync Era and Starknet, Scroll aims to leverage ZK technology to provide faster and more efficient scaling solutions for Ethereum. Unlike optimistic rollups, which can take up to seven days to finalize transactions, ZK-rollups typically settle within minutes, offering a significant advantage in transaction speed.

Challenges Facing the Layer-2 Space

The allegations against Scroll underscore the challenges and scrutiny faced by projects in the competitive layer-2 landscape. While ZK-rollups are often touted as the future of Ethereum scaling, they face stiff competition from alternative approaches, such as Movement Labs’ post-confirmations.

Moreover, the airdrop controversy highlights the volatility and pitfalls of token launches in the crypto industry. A report by Aylo, the pseudonymous founder of Alpha Please, revealed that 23 out of 31 tokens distributed through sizable airdrops have lost value since their first day of listing, with some experiencing severe declines. This trend raises questions about the sustainability and fairness of airdrop-driven token launches.

For Scroll, the path forward lies in rebuilding trust with its community and addressing concerns raised during its token launch. Peng’s acknowledgment of past missteps and commitment to improving the process through Session 2 suggest the team is taking steps to learn from the experience.

The broader crypto industry will likely be watching closely as Scroll navigates its next phase of development. With the promise of faster, more scalable solutions for Ethereum, ZK-rollups like Scroll have the potential to play a transformative role in the ecosystem. However, achieving that vision will require not only technological innovation but also a steadfast commitment to transparency and ethical practices.

As the layer-2 race heats up, Scroll’s ability to recover from this controversy could serve as a litmus test for the project’s resilience and its standing within the Ethereum community.