The lawsuit claims that Binance’s negligent compliance practices enabled malicious actors to exploit the platform for the purpose of laundering stolen cryptocurrency.
The U.S. Western District Court of Washington has received a new class action lawsuit against Binance, which accuses the company and its founder, Changpeng Zhao, of violating U.S. financial regulations and facilitating pervasive money laundering.
Former exchange users Philip Martin, Natalie Tang, and Yatin Khanna filed a lawsuit on Friday alleging that Binance’s negligent compliance practices enabled criminals to launder stolen crypto, resulting in substantial financial losses for U.S. users.
Decrypt reached out to a representative of Binance for comment, but they did not respond promptly. The complaint describes how Binance, under Zhao’s leadership, allegedly operated as an unlicensed money-transmitting business, willfully disregarding anti-money laundering requirements and facilitating transactions that assisted criminals in concealing the origins of illicit funds.
In their lawsuit, the plaintiffs claim that Binance’s meteoric rise to the position of top cryptocurrency exchange in the world was driven by the company’s willful disregard for U.S. rules, which would have limited its exposure to the profitable American market.
The lawsuit also claims that Zhao, who established Binance in 2017, prioritized profits over legal compliance, thereby fostering an environment in which U.S. users were encouraged to circumvent the platform’s minimal compliance checks.
The plaintiffs contend that Binance’s failure to establish robust AML and Know Your Customer protocols has resulted in the exchange serving as a center for the laundering of cryptocurrency, which is frequently the result of breaches and other illegal activities.
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