Binance and its founder, Changpeng Zhao, are facing a class-action lawsuit in the United States, accused of enabling money laundering through cryptocurrency.

Lawsuit Overview

The lawsuit, filed on Aug. 16 in the U.S. District Court for the Western District of Washington, claims that Binance facilitated money laundering activities by serving as a medium for illicit transactions. According to the lawsuit, “Binance.com became a preferred-choice as the ‘get-away driver’ for a large number of bad actors.”

The plaintiffs — Philip Martin, Natalie Tang, and Yatin Khanna — allege that Binance’s inadequate compliance measures allowed criminals to launder stolen cryptocurrency and obscure the origins of illicit funds.

Claims Against Binance

The lawsuit asserts that all cryptocurrency transactions should be permanently recorded on the public blockchain, making them traceable. It alleges that Binance enabled bad actors to disconnect digital assets from the blockchain, making them difficult to track.

Under Zhao’s leadership, Binance is also accused of operating as an unlicensed money-transmitting business in the U.S., deliberately bypassing anti-money laundering (AML) requirements to expand its presence in America. The plaintiffs claim this violated the Racketeer Influenced and Corrupt Organizations Act (RICO), which targets illegal activities as part of an ongoing criminal enterprise.

Legal Representation

Bill Hughes, a lawyer at Consensys, noted that the plaintiffs are represented by former lawyers with significant resources and a strong track record in high-profile cases. These cases include actions against Facebook for consumer privacy violations, opioid manufacturers, and Wells Fargo for fraudulent accounts.

Binance’s Legal Challenges

This lawsuit follows Binance’s recent settlement with the U.S. Department of Justice, in which the company admitted to violating AML regulations and agreed to pay $4.3 billion in fines.

In June, Zhao began serving a four-month prison sentence in a low-security federal facility in California after pleading guilty to violating U.S. anti-money laundering laws.

The outcome of this lawsuit could have significant implications for Binance and the broader cryptocurrency industry. If the case proceeds, it may test the efficacy of blockchain analytics and the challenges of recovering stolen digital assets, potentially setting new legal precedents in regulating crypto exchanges.

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