- Binance faces a new lawsuit for allegedly enabling money laundering.
- The lawsuit accuses Binance of prioritizing profits over legal compliance, labeling them “Crypto-Wash”.
Binance and its former CEO, Changpeng Zhao (CZ), are facing a new class action lawsuit filed by three crypto investors. The lawsuit alleges that the exchange failed to prevent money laundering, which, in turn, led to the plaintiffs’ inability to recover their stolen assets. The plaintiffs filed this complaint in the U.S. District Court for the Western District of Washington, Seattle, on August 19.
The plaintiffs accuse Binance of prioritizing profits over legal obligations. They also claimed the platform facilitated bad actors in making their funds untraceable, thereby shielding them from authorities.
Moreover, the lawsuit alleges that Binance was a depository for ill-gotten gains obtained through hacks, thefts, malware, and ransomware attacks. The suit describes Binance as the “Crypto-Wash Empire,” asserting that the exchange maximized its revenue with the assistance of criminals, thieves, and sanctioned users.
Meanwhile, Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at Ethereum development firm Consensys, weighed in on the situation. In an August 20 post on X, Hughes described the lawsuit as a “natural, predictable follow-on civil action”. And that it aimed at capitalizing on government prosecutions.
However, he also noted that the lawsuit places Binance in a “tough position”. And warned that it could have significant implications for the crypto industry if it goes into trial.
“If this case goes far into discovery and even to dispositive pre-trial motions, then the efficacy of blockchain analytics itself and on-chain asset recovery will be on trial,” Hughes stated. He added that the lawsuit could put Binance in a difficult spot regarding what it might be incentivized to reveal about tracing and recovery.
Binance And Its Legal Troubles
This latest lawsuit adds to Binance’s mounting legal troubles. In November 2023, CZ pleaded guilty to violating U.S. money laundering laws. And resigned as CEO as part of a settlement that included a $4.3 billion fine.
Additionally, the SEC filed a suit against Binance in June 2023, accusing the exchange of misleading practices. And artificially inflating trading volumes.
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