Binance and CEO Zhao in Hot Water: New Lawsuit Raises Serious Concerns

A class action lawsuit has been initiated against Binance and its CEO, Changpeng Zhao, in the U.S. District Court for the Western District of Washington.

The legal action accuses the company and Zhao of facilitating large-scale money laundering and flouting U.S. financial laws.

The lawsuit, filed by former users Philip Martin, Natalie Tang, and Yatin Khanna, claims Binance’s inadequate compliance measures enabled the laundering of stolen cryptocurrencies, leading to substantial losses for American users. It alleges that Binance, under Zhao’s guidance, operated without proper licensing and ignored anti-money laundering regulations, thereby assisting criminals in disguising illegal funds.

The plaintiffs argue that Binance’s growth was partly due to its evasion of U.S. regulatory standards, which would have otherwise limited its access to the American market. They also assert that Zhao’s focus on profit over regulatory compliance created a system where users could evade basic checks.

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This lawsuit follows a recent settlement in which Zhao and Binance admitted to failing in their anti-money laundering obligations. In November 2023, Binance agreed to pay over $4 billion in penalties, Zhao stepped down as CEO, and received a $50 million personal fine for engaging in transactions with users from sanctioned nations.

Alexander Stefanov