After being sued by the Securities & Exchange Commission (SEC), Binance now faces a class-action lawsuit for allegedly profiting from transactions involving stolen cryptocurrency. Legal firm Silver Miller along with co-counsel Kopelowitz Ostrow filed the collective action against Binance and its US-based counterpart operator BAM Trading. The lawsuit states that there are over 100 members of the putative class and the total amount in controversy exceeds $5 million.
The primary plaintiff, Michael Osterer, alleges that he lost 7.2 Bitcoin (BTC) and 449 Ether (ETH), valued at over $1 million at the time of the filing, from his Coinbase account. He claims that these funds were subsequently deposited in Binance without undergoing the necessary Know Your Customer (KYC) procedures to verify lawful ownership.
The lawsuit cites the Commodity Futures Trading Commission’s case and the SEC’s case against Binance as supporting evidence that US citizens engage in unauthorized use of Binance. The plaintiff stresses that Binance is well aware of US-based users using VPN services to access its platform, despite the existence of BAM.
According to the filing, Binance has a “strong monetary incentive to encourage, facilitate, and allow as many transactions on its exchange as possible — even transactions involving stolen cryptocurrency.” Binance allegedly turns a blind eye to the wide variety of money and cryptocurrency laundering it knowingly facilitates through its platform.
The lawsuit also claims that Binance allowed thieves to launder stolen cryptocurrency by neglecting to establish security measures to verify the lawful ownership of cryptocurrency held in Binance accounts. This includes the accounts where the plaintiff’s stolen cryptocurrency was deposited.
To date, Binance has allegedly enabled money laundering by allowing deposits and withdrawals of up to 2 bitcoin per day on the Binance.com exchange without any form of identification verification. Blockworks has reached out to Binance for comment.
The lawsuit invites US residents who have experienced an account breach resulting in crypto theft to contact Silver Miller. It seeks compensation for the plaintiff and other class members according to applicable laws.
On the other hand, skeptics might argue that the lawsuit may merely represent a small portion of Binance’s vast and growing user base. Additionally, the platform has made efforts to comply with regulations by working alongside counterpart operators like BAM Trading. Nevertheless, the outcome of this lawsuit could have significant implications for the rapidly growing crypto economy and how regulations may shift around it in the future.
Source: Blockworks
