A class action lawsuit was filed in the U.S. against crypto exchange Binance and its ex-CEO, accusing the company of failing to prevent the laundering of stolen assets.
Philip Martin, T.F. (Natalie) Tang, and Yatin Khanna filed a class action lawsuit in the U.S. District Court for the Western District of Washington in Seattle against cryptocurrency exchange Binance and its ex-CEO Changpeng Zhao (CZ). The defendants allege that their digital assets were irretrievably lost due to the company’s failure to prevent bad actors from using its platform to launder stolen funds.
The plaintiffs claim that the criminals who stole their assets used Binance to make the assets untraceable. The lawsuit mentions that criminals often use the platform because it allows them to sever the connection between assets and their owners, making the funds virtually untraceable.
The class action lawsuit states that if Binance complied with AML standards, criminals would be identified. Law enforcement would be able to track the hackers’ actions, since blockchain allows this. However, according to the plaintiffs, Binance’s mechanisms facilitate money laundering. The filing also accuses Binance of violating the Racketeer Influenced and Corrupt Organizations Act (RICO), as the plaintiffs named the platform as a key element in schemes to launder stolen funds.
Bill Hughes, Senior Counsel for Consensys, noted that the civil suit is a direct result of “the government prosecutions and enforcement actions” taken against Binance and Changpeng Zhao this year. Therefore, the likelihood of such a lawsuit going to trial is extremely low, the counsel believes. However, Hughes also expressed confidence that the new allegations against the company could have a serious impact on the entire crypto industry. In particular, the lawsuit could call into question the effectiveness of blockchain analysis and asset recovery processes.
The new charges could have a negative impact on Binance, which recently paid large fines imposed on the exchange by a U.S. court. Charges were also filed against Binance in Nigeria, where the company is suspected of market manipulation, harming the country’s economy, money laundering, and terrorist financing.
