Binance Described As ‘Crypto-Wash Empire’ In A Lawsuit Over Money Laundering Activities

Binance and its former CEO Changpeng Zhao are facing a new class-action lawsuit alleging consumer harm due to the exchange’s money laundering activities in a Seattle Federal court. The lawsuit accuses the defendants of putting profits before the law as they allegedly generated substantial amounts of proceeds by allowing notorious actors to make their funds untraceable. 

Plaintiff Highlights Binance’s Willful Violations

In an Aug. 16 class action complaint filed in the U.S. District Court for the Western District of Washington, Seattle, the plaintiffs alleged that “the defendants knowingly failed to register as a Money Services Business, willfully violated the Bank Secrecy Act by failing to implement and maintain an effective Anti-money laundering program, disregarded the crucial KYC rules and violated US economic sanctions in a deliberate and calculated effort to profit from the U.S. market.”

‘The Crypto-Wash Empire’

The filing also underscored that Defendants’ willful disregard of these important laws and regulations turned Binance.com into a magnet and hub for criminals, terrorists, and other bad actors and that Binance.com became a preferred choice as the “get-away driver” for a large number of bad actors. The lawsuit describes Binance as the “Crypto-Wash Empire.” 

The plaintiffs argued that a key attribute of crypto transactions is a permanent record of those transactions on the blockchain, which makes them “permanently and accurately traceable.” “Therefore, without a place to launder crypto, such as Binance.com, if a bad actor steals someone else’s crypto, there is a risk the authorities would eventually track them down by retracing their steps on the blockchain.”

But Can the Allegations Be Proved?

According to Bill Hughes, a lawyer at Consensys, said that the latest class action lawsuit was a ‘natural, predictable follow-on civil action’ that seeks to capitalize on government prosecutions and enforcement actions. However, he also said he’s doubtful about whether the suit will be able to prove these allegations. 

He further underscored that “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.”