Binance Hit With Fresh Class Action Lawsuit Over Money Laundering Allegations

A new class action lawsuit has been filed against Binance in the U.S. Western District Court of Washington, accusing the company and its founder, Changpeng Zhao, of enabling widespread money laundering and violating U.S. financial regulations. 

The lawsuit, brought by former exchange users Philip Martin, Natalie Tang, and Yatin Khanna and filed Friday, alleges that Binance’s negligent compliance practices allowed bad actors to use the platform to launder stolen crypto, causing significant financial harm to U.S. users.

A representative for Binance did not immediately respond to Decrypt’s request for comment.

The complaint details how Binance, under Zhao’s leadership, allegedly operated as an unlicensed money-transmitting business, willfully ignoring anti-money laundering requirements and facilitating transactions that helped criminals obscure the origins of illicit funds. 

According to the plaintiffs, Binance’s rapid ascent to becoming the world’s largest crypto exchange was fueled by its deliberate evasion of U.S. regulations, which would have otherwise curbed its access to the lucrative American market.

The lawsuit also alleges that Zhao, who founded Binance in 2017, prioritized profits over legal compliance, creating an environment where U.S. users were encouraged to bypass the platform’s minimal compliance checks. 

The plaintiffs claim that Binance’s failure to implement robust AML and Know Your Customer protocols turned the exchange into a hub for laundering crypto, often stolen through hacks and other illicit activities.

The fresh class action comes on the heels of a series of legal actions against Zhao and Binance. In November 2023, Zhao and Binance reached a plea agreement with the U.S. Department of Justice, where Zhao admitted to failing to maintain an effective AML program. 

As part of the settlement, Binance agreed to pay over $4 billion in penalties, and Zhao stepped down as CEO. 

Additionally, Zhao was fined $50 million personally for his role in the company’s violations, which included facilitating transactions with users in sanctioned jurisdictions such as Iran and North Korea.