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Binance

Binance & CZ Face New Lawsuit In The US, Ex-DOJ Prosecutor Discloses Stunning Details

Ronaldo Marquez
by Ronaldo Marquez
1 year ago
·
Posted in Breaking News Ticker
Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

In the aftermath of Binance’s settlement in 2023 with US authorities and the subsequent resignation and conviction of its former CEO Changpeng Zhao (CZ), the regulatory landscape appeared to have quieted down for the exchange and its key figure. 

However, recent revelations by a former Department of Justice (DOJ) official-turned-lawyer for blockchain company ConsenSys have thrust Binance and CZ into the legal spotlight.

Binance’s Alleged ‘Crypto-Wash Enterprise’

In a recent social media post, Bill Hughes revealed that the lawsuit accuses Binance and CZ of acting as a “depository” for millions of dollars in cryptocurrency siphoned from digital wallets and accounts of individuals and entities based in the US, following incidents of hacks, malware, theft, or ransomware attacks. 

Related Reading: Crypto ATM Raid In Germany Yields Nearly $28 Million In Cash

The plaintiffs claim that the exchange and associates orchestrated a scheme to maximize profits from various sources, including US users, sanctioned entities, criminals, and crypto thieves.

The lawsuit accuses Binance and accomplices of operating the “Binance Crypto-Wash Enterprise,” a platform allegedly facilitating the transfer of illicitly obtained assets to Binance.com for conversion into different cryptocurrencies before being laundered and withdrawn to obscure their origins. 

This alleged enterprise is said to have facilitated the seamless movement of stolen cryptocurrency across the US and globally.

Blockchain Tracing Technology On Trial?

This latest legal battle comes months after Binance settled with US authorities over anti-money laundering and sanctions violations. CZ also stepped down as CEO as part of the deal and was later imprisoned for four months.

Hughes contends that this new class action lawsuit represents the “natural, predictable follow-on civil action” seeking to recover funds stolen from US consumers and laundered through Binance.

Interestingly, the lawsuit also suggests that had it not been for Binance’s alleged role in the laundering scheme, blockchain transaction tracing could have helped victims recover their stolen funds. Hughes explained:

Paragraph 4 essentially alleges ‘but for Binance, blockchain transaction tracing would have given these victims a chance to get back their stolen funds because everything is so transparent – there’s no place to launder/hide the money.

Related Reading: Cardano Chang Hard Fork Set To Roll Out Next Week

With “deep pockets” and a history of successful class actions, Hughes asserted that these plaintiff lawyers will surely present a formidable challenge for Binance and CZ as they navigate this latest legal minefield.

Furthermore, the lawsuit’s allegations regarding the role of blockchain analytics and asset recovery in the alleged money laundering scheme could have broader implications for the cryptocurrency industry as a whole. 

Suppose the case proceeds to discovery and pre-trial motions. In that case, the former DOJ prosecutor notes that the efficacy of blockchain tracing and on-chain asset recovery could be tested, potentially revealing vulnerabilities or limitations.

Binance
The 1D chart shows BNB’s price trending downwards on Wednesday. Source: BNBUSDT on TradingView.com

At the time of writing, the exchange’s native token, BNB, is trading at $552, down 1.8% in the last 24 hours. 

Featured image from DALL-E, chart from TradingView.com 

Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
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Ronaldo Marquez

Ronaldo Marquez

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Ronaldo is a seasoned crypto enthusiast with over four years of experience in the field. He is passionate about exploring the vast and dynamic world of decentralized finance (DeFi) and its practical applications for achieving economic sovereignty. Ronaldo is constantly seeking to expand his knowledge and expertise in the DeFi space, as he believes it holds tremendous potential for transforming the traditional financial landscape.

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