• Binance and CZ are being charged with allegedly laundering stolen cryptocurrencies.
• Plaintiffs allege that Binance’s lack of AML and KYC checks facilitated money laundering.
• The case could have implications for blockchain analytics and compliance standards for crypto exchanges.

Binance and its former CEO, Changpeng “CZ” Zhao, are now facing a new class action lawsuit alleging their involvement in laundering stolen cryptocurrency.

The complaint, filed on August 16, 2024, in the U.S. District Court for the Western District of Washington, accuses the defendants of facilitating the conversion of stolen digital assets into untraceable funds.

Binance Accused of Helping Criminals Hide Stolen Assets

The lawsuit, filed by plaintiffs Philip Martin, TF (Natalie) Tang and Yatin Khanna, alleges that Binance’s cryptocurrency exchange, Binance.com, was at the center of a scheme that allowed criminals to hide stolen assets.

According to the plaintiffs, the exchange’s activities allowed malicious actors to use the platform to convert stolen cryptocurrencies into other assets, effectively erasing the link between the originally stolen funds and their new form.

The complaint highlights that Binance, under CZ’s leadership, failed to implement effective anti-money laundering (AML) and know-your-customer (KYC) procedures. This failure, the lawsuit alleges, made Binance a preferred choice for laundering illicit funds, in direct violation of U.S. laws and regulations designed to protect consumers and national security.

Key points of the lawsuit include allegations of violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), conversion, and aiding and abetting conversion. The plaintiffs allege that Binance’s lack of compliance controls and intentional evasion of regulatory measures allowed criminals to extensively exploit the platform.

Binance and Changpeng “CZ” Zhao’s Legal Troubles

This lawsuit follows a series of legal troubles for Binance and Zhao. In November 2023, CZ pleaded guilty to U.S. money laundering charges and stepped down as CEO as part of a settlement that included a $4.3 billion fine.

Binance has also come under fire from several US regulators, including the SEC and CFTC, for alleged regulatory violations and deceptive practices.

Legal experts believe that if the class action lawsuit goes to trial, it could test the effectiveness of blockchain analytics and on-chain asset recovery.

The outcome could have major implications for the cryptocurrency industry and potentially revolutionize the way exchanges handle regulatory compliance and fraud prevention.