Binance has been called a “Crypto-Wash Empire” in a new class action lawsuit

What’s new? A group of US investors have filed a class action lawsuit in a Seattle court against the world’s largest centralized crypto exchange (CEX) Binance and its founder and former CEO Changpeng Zhao. The plaintiffs allege that the exchange facilitated the laundering of crypto assets stolen from them, causing them to suffer losses. The statement of claim calls Binance a “Crypto-Wash Empire.”

Statement of claim

What else is known? The plaintiffs believe that the exchange’s activities violate the “Racketeer Influenced and Corrupt Organizations Act” (RICO) because it was an integral part of the laundering of stolen cryptocurrencies.

It is alleged that the platform’s management was aware of the illegal activities of some users, but encouraged them because it benefited the business.

For example, hackers used Binance to make it difficult for law enforcement officials to track on-chain activity and their connection to stolen cryptocurrencies. As a result, tracking and recovering assets is significantly hampered.

Last year, the US authorities also accused Binance of money laundering. As part of the settlement, the company agreed to pay a $4,3 billion fine and allow independent monitors to monitor the exchange’s activities.

US Department of Justice has ordered that outside monitors be given access to documents about Binance’s activities

The condition is part of the exchange’s agreement with authorities to plead guilty to regulatory violations

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Zhao himself also pleaded guilty and received four months in prison in April, while prosecutors had requested three years for him. He began serving his sentence in June and will be released in September.

In June 2023, the US Securities and Exchange Commission (SEC) also filed a lawsuit against Binance. The regulator accused the exchange of operating without registration, offering unregistered securities in the form of tokens and artificially inflating trading volume.

Bill Hughes, legal expert for Ethereum software developer ConsenSys, said the new civil class action lawsuit was predictable. Thus, it aims to capitalize on the state’s harassment of Binance.

Source: X.com

According to Hughes, it will be difficult for the plaintiffs to prove the allegations, but the new lawsuit puts the exchange in a difficult position and could have implications for the entire crypto industry if accepted by the court for review. Specifically, the case will litigate the effectiveness of blockchain analytics and asset recovery.

Hughes also noted that the plaintiffs have good lawyers who have previously litigated against Facebook over privacy breaches, Wells Fargo Bank over account fraud, and opioid companies. “They smell the blood in the water,” Hughes concluded.