The United States District Court for Washington, Seattle, has received a lawsuit accusing Binance and the exchange’s former CEO, Changpeng Zhao “CZ”, of facilitating money laundering.
Three crypto investors filed the latest lawsuit, stating that the crypto exchange permitted extensive money laundering across their platform. In a nutshell, they accused Binance of allowing stolen crypto assets to pass through its outlet without tracking or monitoring.
Money Laundering Allegation Details
For context, three litigants – Natalie Tang, Philip Martin, and Yatin Khanna asserted that thieves stole their crypto tokens and moved them using Binance. Furthermore, they insisted that the exchange was aware and stayed indifferent as the stolen cryptocurrencies left for unknown destinations.
Notably, the above accusations spell out Binance’s infringement of the Racketeer Influenced and Corrupt Organizations (RICO) Act in the US federal law. Therefore, it underscores the gravity of the negligence and possible negative impacts on the exchange.
Equally important is that the hackers’ digital trails were intractable, rendering efforts to recover the stolen assets useless. According to the accusers, the lost fund would not have been gone forever if the exchange had not erased the hackers’ virtual footprints.
Also contained in the lawsuit were allegations that during CZ’s tenure as the exchange’s CEO, Binance operated without full licensing and did not meet regulatory Anti-Money Laundering (AML) standards. According to the plaintiffs, failing to meet AML requirements made the exchange platform favorable for money laundering and other financial vices.
Binance Continues To Battle Global Regulations
As expected, this legal action puts Binance and CZ in a tight spot, and its outcome could devastate both Binance and the entire blockchain community.
Reacting to the filed lawsuit, Director and Senior Counsel at Consensys, Bill Hugh, remarked, “If this case goes far into discovery and even to dispositive pre-trial motions (it probably won’t – CZ gonna open up that wallet and make it go away at some point), then the efficacy of blockchain analytics itself and on-chain asset recovery will be on trial!”
👀🚨👀🚨 @binance and @cz_binance were sued last Friday by class plaintiffs in Seattle federal court. An interesting class action brought by top class action lawyers alleging consumer harm as a result of Binance's money laundering. And the natural, predictable follow-on civil… pic.twitter.com/vMlFuUnzEr
— Bill Hughes : wchughes.eth 🦊 (@BillHughesDC) August 20, 2024
In the meantime, Binance’s predicament remains complicated by contentions with several regulators, with its platform now under strict observation by several agencies. It also doesn’t help that CZ is serving a jail term for charges relating to money laundering.
