Class-Action Lawsuit Accuses Binance, Former CEO CZ, Of Money Laundering

Three cryptocurrency investors have filed a class-action lawsuit against Binance, the largest cryptocurrency exchange in the world. They allege that Binance facilitates money laundering and prevents them from recovering their stolen assets. Binance and its former CEO, Changpeng Zhao (C.Z.), are confronting new legal issues.

The lawsuit, filed on August 16 in the U.S. District Court for the Western District of Washington, claims that the plaintiffs’ cryptocurrency was stolen by the thieves and then sent to Binance. The plaintiffs contend that one notable characteristic of cryptocurrency is the permanent record of transactions stored on the blockchain, which renders them translatable.

However, they allege that Binance enabled the thieves to “remove the connection between the wallet and the digital assets,” essentially rendering the money untraceable, thereby facilitating the laundering of their pilfered cryptocurrency.

The legal action accuses Binanc of breaking the Racketeer Influenced and Corrupt Organisations Act (RICO) by having a vital role in the money laundering process. Claimants assert that Binance prioritized increasing revenue by catering to criminals, thieves, and approved users. They call the exchange a “Crypto-Wash Empire” that profited from illegal activities.

Binance Faces Legal Challenges In Lawsuit

While the outcome of this class-action lawsuit is yet unknown, legal experts think it puts Binance in a unique situation. Senior counselor Bill Hughеs of Ethereum development company Consensys views this lawsuit as a predictable response to the government’s legal actions against Binance and C.Z.

The potential implications for the cryptocurrency sector are noteworthy. However, The resilience of blockchain analytics and asset recovery on-chain, essential for tracking and recovering stolen cryptocurrency, would probably change if the case progresses to trial. Hughеs stated that this would compel Binance to examine how it manages recovery and training, a sensitive matter for the entertainment business.

However, this is not the first time Binancе and its former CEO have faced legal problems. The SEC filed a lawsuit against Binance in June 2023, alleging that it misled investors about its market surveillance and artificially inflated trading volumes.

Furthermore, as part of an agreement with the authorities, C.Z. acknowledged his transgression of U.S. money laundering laws and resigned in November 2023. Additionally, BINA agreed to pay a handsome fine of $4.3 billion.

The recent class action lawsuit adds a new perspective to Binance’s legal challenges. Whether the plaintiffs win or lose the case will likely prompt further inquiries into the exchange’s anti-money laundering activities. It might potentially impact the direction of cryptocurrency regulation in the future.

Furthermore, the author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.