Binance Accused of Acting as 'Get-Away Driver' in Crypto Laundering Lawsuit

Binance and its founder, Changpeng Zhao, are facing a class-action lawsuit in the U.S. District Court for the Western District of Washington. Filed on August 16, the lawsuit accuses Binance of facilitating money laundering activities by allowing bad actors to use cryptocurrency to obscure the origins of stolen funds. Plaintiffs Philip Martin, Natalie Tang, and Yatin Khanna claim that Binance's inadequate compliance measures, including weak Know Your Customer (KYC) protocols, enabled criminals to launder crypto through the platform, likening the exchange to a "get-away driver" for illicit activities.

The lawsuit also alleges that Binance operated as an unlicensed money-transmitting business in the U.S. under Zhao's leadership, deliberately avoiding anti-money laundering (AML) regulations to fuel its growth in the American market. The plaintiffs argue that this behavior violated the Racketeer Influenced and Corrupt Organizations Act (RICO), a federal law designed to combat organized crime. Furthermore, the lawsuit contends that Binance allowed digital assets to be disconnected from the public blockchain, making it difficult to trace stolen funds and compromising the transparency of crypto transactions.

This legal action comes on the heels of Binance's recent settlement with the U.S. Department of Justice, where the exchange admitted to AML violations and agreed to pay $4.3 billion in fines. Zhao also began serving a four-month prison sentence in June for violating U.S. AML laws. The outcome of this new lawsuit could have significant consequences for Binance and the broader cryptocurrency industry, potentially setting new legal precedents for regulating crypto exchanges and addressing the challenges of recovering stolen digital assets.

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