Binance and its former CEO Changpeng Zhao have been accused of negligent compliance practices that enabled money laundering by users of the platform.
Plaintiffs claim that Binance’s negligence resulted in their assets being laundered on the platform.
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Posted August 21, 2024 at 4:12 am EST.
Three crypto investors are leading a class action lawsuit against Binance and its founder and former CEO Changpeng Zhao.
In a lawsuit filed in the U.S. Western District Court of Washington, Philip Martin, Natalie Tang, and Yatin Khanna allege that Binance’s negligent practices with respect to compliance resulted in their stolen crypto being laundered on the exchange.
Incidentally, none of the plaintiffs held an account with Binance, but had their crypto stolen from them on other platforms. Their main issue seems to be that the stolen funds ended up at Binance, where they were ultimately laundered.
Martin and Tang claim that tens of thousands of dollars-worth of crypto was stolen from their Coinbase accounts, while Khanna claims that $1.5 million worth of crypto was stolen from an unnamed platform.
“Binance.com failed to apply KYC and AML procedures as required by statutory law to detect the lawful ownership of the cryptocurrency properly belonging to Plaintiffs or members of the Class,” said the plaintiff’s lawyers in the filing.
They argued that Binance had become the preferred choice as the “get-away driver” for bad actors because of the exchange’s disregard of important laws and regulations. The lawyers claim that these bad actors were allegedly able to launder funds by exchanging stolen assets for clean ones on Binance’s trading platform.
According to Bill Hughes, Senior Counsel & Director of Global Regulatory Matters at Consensys, the lawyers representing the plaintiffs in this class action lawsuit are well credentialed and have experience in high-profile class action lawsuits.
“Their pockets are deep and they smell the blood in the water,” said Hughes on X.
In his view, if the case does go into discovery and pre-trial motions, the efficacy of blockchain analytics itself and onchain asset recovery could be on trial.
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