A global cryptocurrency trading platform, Binance, is facing a new class action lawsuit in the U.S. Western District Court of Washington, accused of facilitating money laundering and violating U.S. financial regulations. The lawsuit, filed by former Binance users Philip Martin, Natalie Tang, and Yatin Khanna on Friday, alleges that the company and its founder, Changpeng Zhao, neglected compliance practices, allowing criminals to use the platform for laundering stolen cryptocurrencies, causing significant financial losses to U.S. users.
The plaintiffs argue that under Zhao’s leadership, Binance operated as an unlicensed money-transmitting business, deliberately ignoring anti-money laundering (AML) regulations and enabling transactions that concealed the origins of illicit funds.
The lawsuit claims that Binance’s rapid growth into the world’s largest crypto exchange was driven by its intentional evasion of U.S. regulations, which would have otherwise restricted its access to the American market.
The suit further alleges that Zhao prioritized profits over legal compliance, fostering an environment where U.S. users were encouraged to bypass the platform’s minimal compliance checks. This, according to the plaintiffs, led to Binance becoming a hub for laundering cryptocurrencies, often stolen through hacks and other illegal activities.
In response, Binance announced on Tuesday that it had prevented over $2.4 billion in potential user losses from suspected scams and fraudulent activities in the first seven months of 2024.
The company stated on its official website, in a post dated August 20, 2024, that its advanced internal risk engine, which uses Artificial intelligence (AI) and manual review, detected and flagged suspicious transactions, protecting over 1.2 million users.
The statement noted that approximately $1.1 billion of the prevented losses were related to suspected crypto scams during the withdrawal process.
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