Binance Faces New Class Action Lawsuit As The Controversy Continues
Binance and its former CEO, Changpeng Zhao (CZ), are facing a class action lawsuit by three crypto investors who claim they could not recover their stolen assets because Binance failed to prevent money laundering. Previously, Binance.US had its license revoked by The North Dakota Department of Financial Institutions (DFI).
A Tough Spot
On August 16th, the plaintiffs filed their complaint in the U.S. District Court for the Western District of Washington. They argue that their stolen crypto was sent to Binance by thieves to hide its origin and make it untraceable. The lawsuit alleges that Binance played a key role in the laundering process, violating the Racketeer Influenced and Corrupt Organizations (RICO) Act.
Bill Hughes of ConsenSys expressed doubt about the lawsuit and its ability to prove its claims but acknowledged that it puts Binance in a tough spot. He noted that if the case advances, it could test the effectiveness of blockchain analytics and asset recovery.
No Confidence
CZ admitted guilt in November 2023 for violating U.S. money laundering laws, leading to his resignation and Binance agreeing to pay $4.3 billion in fines. CZ received a four-month prison sentence in April and began serving it in June.
Additionally, the SEC has sued Binance and CZ for misleading statements about market controls and inflated trading volumes, with most of the case allowed to proceed as of June 28th. In any case, trust in Binance has waned due to allegations of failing to prevent money laundering, misleading regulators, and inflating trading volumes, despite the exchange trying to help the industry in the past.
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