Binance and CZ Accused of Aiding Money Laundering in Class-Action Lawsuit

Three crypto investors have accused the platform of failing to prevent money laundering, which they claim directly led to their inability to recover stolen digital assets.

The lawsuit, filed on August 16 in the United States District Court for the Western District of Washington, alleges that Binance offers bad actors a way to obscure the digital trail of assets, making them untraceable.

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The lawsuit highlights that blockchain technology ensures that transactions are permanently recorded and traceable. They argue that without a platform like Binance to facilitate laundering, authorities could potentially track down stolen assets by following the blockchain trail.

This, they believe, makes Binance complicit in the money laundering process, which is a violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act.

Bill Hughes, a lawyer at Consensys, commented on the lawsuit's potential impact in an August 20 post on X. He expressed doubts about the plaintiffs' ability to back their claims, describing the lawsuit as a "predictable follow-on civil action" aimed at capitalizing on ongoing enforcement actions against Binance. He added:

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 also remarked that this situation puts Binance in a difficult position regarding the tracing and recovery of assets, which could have broader implications for the crypto industry.

This lawsuit adds to Binance and its former CEO's legal troubles. In November 2023, Zhao pleaded guilty to violating US money laundering laws as part of a settlement US Securities and Exchange Commission (SEC), which included his resignation from Binance.

Zhao was sentenced to four months in prison in April and began his sentence in June, with an expected release in September.

The outcome of this latest lawsuit could have significant repercussions for Binance and the broader crypto industry.

Gode S. , Web3 Market Analyst

Gode is a Web3 Market Analyst who researches the most important industry events and interprets how they affect the wider Web3 space. Her formal education in media culture & digital rhetoric allows her to employ a methodical approach to evaluating critical Web3 news data, including large-scale events and the wider social sentiment within the ecosystem.
Gode is a mutilingual professional, having studied in multiple universities all across Europe. This allows her to have a one-of-a-kind opportunity to analyze Web3 social sentiments spanning different cultures and languages and, in turn, develop a much deeper understanding of how the Web3 space is growing within different communities. With the rest of her team, Gode works to identify crucial crypto news patterns and provide unbiased and data-driven information.
Gode’s passions include working and communicating with people, and when she’s not researching Web3 news, she spends her time traveling and watching true crime documentaries.

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