Class Action Lawsuit Filed Against Binance for Money Laundering Allegations
A new class action lawsuit has been filed against Binance in the U.S. Western District Court of Washington, accusing the company and its founder, Changpeng Zhao, of enabling widespread money laundering and violating U.S. financial regulations.
Allegations of Money Laundering and Regulatory Violations
The lawsuit, brought by former exchange users Philip Martin, Natalie Tang, and Yatin Khanna and filed Friday, alleges that Binance’s negligent compliance practices allowed bad actors to use the platform to launder stolen crypto, causing significant financial harm to U.S. users.
- The complaint details how Binance operated as an unlicensed money-transmitting business
- Under Zhao’s leadership
- Ignoring anti-money laundering requirements
- Binance facilitated transactions helping criminals obscure origins of illicit funds
- Plaintiffs claim rapid growth fueled by evasion of U.S. regulations
Profit Over Legal Compliance
The lawsuit also alleges that Zhao prioritized profits over legal compliance, creating an environment where U.S. users were encouraged to bypass the platform’s minimal compliance checks.
- Binance failed to implement robust AML and Know Your Customer protocols
- Turning the exchange into a hub for laundering crypto
- Often stolen through hacks and illicit activities
Legal Actions Against Zhao and Binance
The fresh class action follows a series of legal actions against Zhao and Binance. In November 2023, Zhao and Binance reached a plea agreement with the U.S. Department of Justice, where Zhao admitted to failing to maintain an effective AML program.
- Settlement involved Binance paying over $4 billion in penalties
- Zhao stepping down as CEO
- Personal fine of $50 million for Zhao
- Role in violating transactions with users in sanctioned jurisdictions
Hot Take:
The allegations of money laundering and regulatory violations brought against Binance in the class action lawsuit highlight the importance of robust compliance practices in the cryptocurrency industry. It serves as a reminder to prioritize legal adherence and anti-money laundering measures to protect users and maintain trust in the ecosystem.
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