Binance and Changpeng Zhao Hit with New Money Laundering Lawsuit

Crypto Investors Allege Binance’s Role in Asset Theft 

Three crypto investors are suing Binance and CZ, claiming they were unable to recover their stolen assets due to the platform’s alleged failure to prevent money laundering. They filed the case on August 16 in the US District Court for the Western District of Washington. The plaintiffs, represented by a top legal team, argue that Binance’s actions directly harmed consumers. 

The lawsuit states that after the investors’ funds were stolen, the assets were transferred to Binance. This transfer made it nearly impossible to trace the assets back to their original owners.  

The plaintiffs argue that without a platform like Binance, the thief could have been tracked down by authorities. Blockchain tracing could have revealed the thief’s identity. They accuse Binance and CZ of facilitating these money laundering activities.  

Potential Industry-Wide Impact 

Bill Hughes, a lawyer with experience at Consensys and the DOJ, has expressed skepticism about the plaintiffs’ ability to meet the burden of proof. If they fail, the case may not progress to the discovery phase, where both parties closely examine evidence. 

Despite this, the plaintiffs’ legal team has a strong track record, having previously taken on major companies like Facebook and Wells Fargo. This could spell trouble for Binance and CZ, especially if the case moves forward. 

Hughes also noted that if the case enters the discovery phase, it could have significant implications for the broader crypto industry. Binance might have to disclose details about its asset tracking and recovery processes, potentially leading to greater regulatory scrutiny. 

The case could test the effectiveness of blockchain analytics. It may also challenge on-chain asset recovery methods. Agencies like the FBI and IRS might take an interest in this case. 

CZ remains in prison. Meanwhile, Binance has been dealing with the fallout from his guilty plea to violating US money laundering laws. The company needs to pay a fine of $4.3 billion as part of the settlement. Richard Teng has since stepped in as CEO. 

Despite these legal challenges, Binance claims to have prevented up to $2.4 billion in potential user losses this year. In a recent press release, the company highlighted its strong risk management practices, which it says have helped stop fraud that could have affected over 1.2 million users.