Binance class action alleges co. allowed hackers, thieves to steal, launder crypto

Binance class action overview: 

• Who: Three cryptocurrency owners have filed a class action lawsuit against Binance and its founder.
• Why: The plaintiffs allege the defendants facilitated the laundering of stolen cryptocurrency on the Binance platform.
• Where: The Binance class action was filed in a Washington federal court.

Binance and its founder Changpeng Zhao facilitated the laundering of stolen cryptocurrency  on the platform, according to a new class action lawsuit filed by a group of cryptocurrency owners.

The three plaintiffs filed the class action complaint against Binance Holdings Ltd. and Zhao on Aug. 16 in a Washington federal court, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) and other federal laws.

The plaintiffs claim that the platform allows criminals to move stolen cryptocurrency without detection.

“Binance.com acted as a depository for millions of dollars of cryptocurrency removed from the digital wallets, accounts or protocols of individuals and entities located in the United States as a result of hacks, malware, theft or ransomware, including Plaintiffs and members of the Class,” the lawsuit says.

Cleaning stolen crypto

The class action alleges that Binance has become a primary channel for criminals looking to transfer stolen funds across the U.S. and internationally. 

The lawsuit states that, despite Binance’s record $4.3 billion settlement and guilty plea for violations of the Bank Secrecy Act, and agreement with the U.S. Department of Justice to implement anti-money laundering measures, hackers have continued to exploit the platform to clean stolen cryptocurrency.

In November, Binance admitted to failing to register as a money-transmitting business and to violations of U.S. sanctions. Zhao was sentenced in April to four months in prison for his role in the company’s inability to create an effective anti-money laundering system. 

As part of the DOJ settlement, Zhao agreed to step down from his leadership position at Binance.

However, the plaintiffs argue that Binance’s illegal activity persisted even after these measures were supposed to take effect. 

Plaintiffs Philip Martin and Yatin Khanna say they lost significant amounts of cryptocurrency to hackers who used Binance to funnel the stolen assets. Martin alleges that in 2021, tens of thousands of dollars were stolen from his Coinbase account and transferred to Binance. Khanna claims he lost over $2.4 million in two separate thefts in 2022, with $1.5 million of that amount sent to Binance.

The complaint alleges that Binance’s lax policies allegedly enabled criminals to open anonymous accounts, transfer stolen crypto, and then withdraw the funds without providing personal identification.

The plaintiffs are seeking certification of the class action, damages, fees, costs and a jury trial.

What do you think of the allegations in this Binance lawsuit? Let us know in the comments.

The plaintiffs are represented by Lynn Lincoln Sarko, Derek W. Loeser and Chris N. Ryder of Keller Rohrback LLP, Eric I. Niehaus of Robbins Geller Rudman & Dowd LLP, David C. Silver and Jason S. Miller of Silver Miller Law Firm, and John C. Herman of Herman Jones LLP. 

The Binance cryptocurrency lawsuit is Martin et al. v. Binance Holdings LTD et al., Case No. 2:24-cv-01264, in U.S. District Court for the Western District of Washington.

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