- A class action request contends Binance enabled laundering of stolen cryptocurrency assets.
- The accusers claim Binance’s involvement prevented recovery of stolen digital Successful assets.
- The lawsuit could impact how exchanges manage stolen assets and prevent money laundering.
One of the largest crypto exchanges, along with its former chief executive officer , Changpeng Zhao, faces a new legal battle. A class action petition filed on August 16, 2023, in the U.S. District Court for the Western District of Washington, Seattle, explains that Binance’s failure to prevent money counterfeiting resulted in notable losses for three U.S.-based crypto entrepreneurs.
The Claims of Binance’s Role in Money Laundering
The complainants claim that hackers stole their crypto properties and transferred the stolen revenue to Binance for theft. They argue that the company played a crucial role in breaking the connection between the digital ledger and their assets, making them untraceable. Consequently, the plaintiffs allege that Binance’s involvement prevented them from recovering their stolen assets.
Moreover, the legal action asserts that without Binance’s platform, blockchain technology’s transparency could have allowed the victims to trace their assets. The claimants accuse Binance of violating the Illicit Business and Corrupt Organisations Act by allegedly facilitating money laundering as part of its operations. They believe this caused serious financial harm.
Expert Opinions and Potential Regulatory Impact
Bill Hughes, senior counsel and director of global regulatory matters at Consensys, commented on the lawsuit’s implications. He described the case as a “natural, predictable follow-on civil action” that builds upon previous government actions against Binance. However, Hughes expressed doubts about whether the plaintiffs can prove that blockchain transparency alone could have enabled the recovery of stolen assets if Binance had not been involved.
Importantly, Hughes noted that if the lawsuit advances, Binance might be required to reveal sensitive details about its blockchain analytics and asset recovery processes. This could have wide-ranging consequences for the cryptocurrency industry, potentially influencing how exchanges handle stolen assets and respond to accusations of money laundering.
Ongoing Legal Challenges for Binance and CZ
Additionally, Binance is involved in another suit with the U.S. Securities and Exchange Commission . The SEC’s June 2023 dispute settlement accuses Binance and CZ of misleading practices, including manipulating market surveillance controls and inflating trading volumes. The court has allowed most of this case to proceed, adding further pressure on Binance as it navigates its ongoing legal issues.
As the class action lawsuit progresses, its outcome could have important implications for Binance and the broader crypto community, particularly regarding how exchanges manage stolen assets and their responsibilities in preventing illegal activities.
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