Seattle, WA, Tuesday, August 27, 2024 – Cryptocurrency exchange Binance and its former CEO, Changpeng Zhao, are facing another class-action lawsuit.
The filing can be reached here.
This time, three cryptocurrency investors allege that the exchange failed to prevent money laundering on its platform.
The lawsuit, filed last Friday in the U.S. District Court for the Western District of Washington, claims that the plaintiffs’ cryptocurrencies were stolen and then deposited on Binance by the thieves.
The purpose, according to the lawsuit, was to “remove the connection between the ledger and their digital assets,” essentially making the stolen crypto untraceable.
The lawsuit argues that Binance’s actions constitute a violation of the Racketeer Influenced and Corrupt Organizations Act (RICO).
The plaintiffs claim that without a platform like Binance to launder stolen crypto, authorities would have a better chance of tracking down criminals by following the blockchain.
This lawsuit comes after Binance settled with the U.S. Department of Justice earlier this year, agreeing to pay over $4.3 billion. The exchange also paid an additional $2.85 billion to settle with the U.S. commodities regulator. These settlements stemmed from violations of anti-money laundering (AML) and sanctions laws.
Additionally, Zhao stepped down as CEO and pleaded guilty to one count of violating AML rules, receiving a four-month prison sentence.
Industry expert Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at Consensys, commented on the lawsuit via social media.
He called it a “natural, predictable follow-on civil action” and highlighted the potential impact on the entire industry if the case goes to trial.
While the key allegation is labeled “dubious” by Hughes, the lawsuit places Binance in a difficult position. It remains unclear if Binance will settle or allow the case to proceed through the legal system.
Binance, one of the world’s largest cryptocurrency exchanges, is entangled in legal battles across multiple countries. The U.S. Securities and Exchange Commission (SEC) has sued Binance for alleged securities violations. In Europe, Binance faces scrutiny in Germany, the Netherlands, and the UK, leading to restrictions and investigations. Australia has launched a probe, while Japan issued a warning for operating without registration. Canada and Malaysia have cracked down on Binance for non-compliance, and in Nigeria, Binance is under investigation for illegal operations.
A Nigerian Court is expected to take up the Money Laundering suit next week, as one of Binance’s Executives is in a Nigerian Jail.
