A lawsuit has been filed in the Seattle federal court against Binance and its founder, Changpeng Zhao. According to the complaint, three crypto investors were unable to recover stolen assets because the exchange failed to prevent money laundering.
The document states that the perpetrators stole cryptocurrencies from the plaintiffs and subsequently used the platform to withdraw funds. The prosecution claims that Binance was aware of and to some extent encouraged these actions as part of its profitable business model.
Investor representatives are convinced that the exchange was a significant part of the money laundering process and effectively participated in racketeering, violating the RICO Act. The latter implies triple damages, noted ConsenSys lawyer Bill Hughes.
???? @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
According to the expert, the plaintiffs’ lawyers are well-qualified. They have represented groups in lawsuits against Facebook for privacy violations and against Wells Fargo for fraudulent accounts.
“Their pockets are deep, and they smell blood in the water. […] If the case disclosure goes far and even to dispositive motions (which is unlikely, as CZ will at some point open his wallet and make it disappear), then the effectiveness of blockchain analytics and on-chain asset recovery will be on trial!” — emphasized Hughes.
The specialist noted that in this case, the accusation could extend to the FBI, HSI, IRS-CI, Chainalysis, TRM, Merkle, Elliptic, and other companies and agencies.
Hughes considers the lawsuit, aimed at extracting profit, expected due to the platform’s previous scrutiny by regulatory authorities. He “doubts” that the court will rule in favor of the plaintiffs.
In November 2023, Binance settled claims with the U.S. Department of Justice regarding sanctions violations and money laundering by agreeing to pay $4.3 billion. The fine for Zhao personally amounted to $50 million.
At the time of writing, the exchange’s founder is serving a four-month prison sentence following an April conviction. Federal Bureau of Prisons data indicates that CZ is scheduled for release on September 29.