Class Action Lawsuit against Binance and Changpeng Zhao Alleges Money Laundering
Binance and its former CEO, Changpeng Zhao, are facing yet another class action lawsuit, this time brought by three cryptocurrency investors who allege that the exchange failed to prevent money laundering. The lawsuit was filed last Friday in the U.S. District Court for the Western District of Washington, Seattle.Laundering of Stolen CryptoThe three primary plaintiffs claim that their cryptocurrencies were stolen and subsequently deposited by the thieves on Binance to "remove the connection between the ledger and their digital assets," thereby making the stolen cryptocurrencies untraceable.The lawsuit alleges that Binance was complicit in the money laundering process, which constitutes a violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act.“Without a place to launder crypto, such as Binance.com, if a bad actor steals someone else's crypto, there is a risk that the authorities would eventually track them down by retracing their steps on the blockchain,” the class action lawsuit asserts.Interestingly, Binance recently claimed that it had prevented the fraudulent loss of $2.4 billion worth of cryptocurrency in 2024.The Big Settlement of BinanceEarlier, Binance reached a settlement with the US Justice Department, agreeing to pay over $4.3 billion. The exchange also paid an additional $2.85 billion to settle with the US commodities regulator. The settlement with the Justice Department included a simultaneous guilty plea to violations of US anti-money laundering (AML) and sanctions laws.Zhao, the exchange's founder, also stepped down as CEO and pleaded guilty to one count of violating anti-money laundering rules. He has been sentenced to four months in prison.Meanwhile, Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at Consensys, highlighted on social media that the latest class action lawsuit is a "natural, predictable follow-on civil action that seeks to capitalise (or, depending on how you characterise these things, recover) on the government prosecutions and enforcement actions from earlier in the year."???????????????? @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, 2024However, he labelled the key allegation as "dubious." Nonetheless, he pointed out that the lawsuit has placed Binance in a "tough position," and if it proceeds to trial, it could have significant ramifications for the entire industry.“If this case goes far into discovery and even to dispositive pre-trial motions (it probably won't - CZ is likely to 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! (cc: FBI, HSI, IRS-CI, Chainalysis, TRM, Merkle, Elliptic et al)” he added. This article was written by Arnab Shome at www.financemagnates.com.
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Binance and its former CEO, Changpeng Zhao, are facing yet another class action lawsuit, this time brought by three cryptocurrency investors who allege that the exchange failed to prevent money laundering. The lawsuit was filed last Friday in the U.S. District Court for the Western District of Washington, Seattle.
Laundering of Stolen Crypto
The three primary plaintiffs claim that their cryptocurrencies were stolen and subsequently deposited by the thieves on Binance to "remove the connection between the ledger and their digital assets," thereby making the stolen cryptocurrencies untraceable.
The lawsuit alleges that Binance was complicit in the money laundering process, which constitutes a violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act.
“Without a place to launder crypto, such as Binance.com, if a bad actor steals someone else's crypto, there is a risk that the authorities would eventually track them down by retracing their steps on the blockchain,” the class action lawsuit asserts.
Interestingly, Binance recently claimed that it had prevented the fraudulent loss of $2.4 billion worth of cryptocurrency in 2024.
The Big Settlement of Binance
Earlier, Binance reached a settlement with the US Justice Department, agreeing to pay over $4.3 billion. The exchange also paid an additional $2.85 billion to settle with the US commodities regulator. The settlement with the Justice Department included a simultaneous guilty plea to violations of US anti-money laundering (AML) and sanctions laws.
Zhao, the exchange's founder, also stepped down as CEO and pleaded guilty to one count of violating anti-money laundering rules. He has been sentenced to four months in prison.
Meanwhile, Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at Consensys, highlighted on social media that the latest class action lawsuit is a "natural, predictable follow-on civil action that seeks to capitalise (or, depending on how you characterise these things, recover) on the government prosecutions and enforcement actions from earlier in the year."
???????????????? @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
However, he labelled the key allegation as "dubious." Nonetheless, he pointed out that the lawsuit has placed Binance in a "tough position," and if it proceeds to trial, it could have significant ramifications for the entire industry.
“If this case goes far into discovery and even to dispositive pre-trial motions (it probably won't - CZ is likely to 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! (cc: FBI, HSI, IRS-CI, Chainalysis, TRM, Merkle, Elliptic et al)” he added. This article was written by Arnab Shome at www.financemagnates.com.
