The Allegations Against Binance
The cryptocurrency world is no stranger to scandals, and Binance is again in the spotlight as it faces a lawsuit from Fisco, the now-owner of the Japanese exchange Zaif, which was hacked for a staggering $60 million back in 2018. Plaintiffs claim that Binance’s notably lax Know Your Customer (KYC) protocols and hefty daily withdrawal limits essentially rolled out a welcome mat for money laundering.
What’s on the Table?
The lawsuit filed in the Northern District of California accuses Binance of facilitating the laundering of $9 million in stolen cryptocurrency. The plaintiffs argue that given the transparent nature of blockchain technology, Binance had both the ability and the responsibility to track and freeze the stolen assets but chose not to.
Location, Location, Location!
A considerable part of the legal argument focuses on the claim that Binance’s servers are based in California thanks to its use of Amazon Web Services (AWS). Even though AWS is a global powerhouse with the ability to shift servers around faster than a magician, the lawsuit posits that much of Binance’s infrastructure presumably resides in the Golden State. They follow up with claims that California-based custodians handle the cold storage of assets. They point to Binance-acquired Swipe, which allegedly uses Coinbase and BitGo, as evidence that California is the place to be in this drama.
Shaky Foundations and Legal Maneuvers
However, this case appears to be built on shaky ground. Despite their arguments, questioning how much actual legal standing they have in bringing Binance to trial in California raises eyebrows. The exchange is renowned for its elusive nature, making it as tough to catch as a greased pig. Previous efforts to pursue legal action against Binance in New York have also met with challenges.
More than Just KYC Issues
On top of all this, Fisco is accusing Binance of a suite of crimes related to money laundering practices, claiming restitution for 1,457 Bitcoin (BTC) allegedly funneled through their platform. To make matters worse for Binance, they are also facing claims of unfair competition due to their subpar Anti-Money Laundering (AML) measures. The Financial Action Task Force has already taken notice of Binance’s tendency to change jurisdictions more often than some people change their socks, hinting at a strategy to evade stronger regulations.
A Vanishing Act?
As of now, Binance has kept tight-lipped, with no immediate comments regarding the lawsuit. Will they manage to wiggle their way out once again, or is this time different? One thing’s for sure: the plot thickens in the crypto underworld.
