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Binance, the world’s leading cryptocurrency exchange, and its former CEO Changpeng Zhao (CZ) are under scrutiny again. A new class action lawsuit, filed on August 16 in the U.S. District Court for the Western District of Washington, Seattle, accuses the exchange of failing to prevent money laundering. The plaintiffs, three cryptocurrency investors, claim that this negligence led to their inability to recover stolen assets.
The complaint alleges that the plaintiffs’ cryptocurrency was stolen and funneled through Binance by the perpetrators to sever the connection between the digital assets and the blockchain ledger, rendering the assets untraceable. The plaintiffs highlight that a fundamental aspect of blockchain technology is its ability to maintain a permanent and accurate record of all transactions. They argue that “without a place to launder crypto, such as Binance.com, if a bad actor steals someone else’s crypto, there is a risk the authorities would eventually track them down by retracing their steps on the blockchain.”
According to the lawsuit, Binance played a critical role in the money laundering process, allegedly violating the Racketeer Influenced and Corrupt Organizations (RICO) Act. The plaintiffs contend that Binance’s platform was indispensable in helping the criminals conceal their tracks, making asset recovery impossible.
This lawsuit adds to Binance’s growing list of legal troubles. In November 2023, CZ pleaded guilty to violating U.S. money laundering laws and subsequently stepped down as Binance’s CEO. As part of the settlement, Binance agreed to pay $4.3 billion in fines. CZ was sentenced to four months in prison in April 2024, a term shorter than the three years federal prosecutors had sought. He began serving his sentence in June and is expected to be released in September.
Additionally, the Securities and Exchange Commission (SEC) filed a separate lawsuit against Binance in June 2023, accusing the exchange and CZ of misleading practices related to market surveillance controls and inflating trading volumes. A court has allowed most of that case to proceed, adding further pressure on the embattled exchange.
Cointelegraph reached out to Binance for comment, but no response was received before publication.