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Binance Sued for Facilitating Money Laundering of $9M

Binance Sued for Facilitating Money Laundering of $9M

Japanese crypto exchange Fisco has filed a complaint against Binance. The former claims that the leading crypto exchange permitted hackers to cash out over $9 million in illicit funds due to lax know-your-customer (KYC) policies.

In September 2018, Fisco (formerly known as ZAIF) was targeted by hackers who went away with over $60 million worth of Bitcoin, Bitcoin Cash, and Monacoin. Cybercriminals drained 4.5 billion yen from users’ hot wallets, as well as 2.2 billion yen from the assets of the company. The total loss amounted to 6.7 billion yen, amounting to $60 million at the time.

After two years, Fisco is suing Binance for serving as an accomplice in the laundering of these stolen funds. Fisco is demanding that the $9 million (1,457 BTC) funds cashed out through Binance in 2018 should be returned.

Fisco Accusations on Binance

Fisco has accused Binance of allegedly failing to stop hackers from cashing out $9 million worth of cryptocurrencies out of the latter’s account. Accordingly, the defendant, Binance Holdings, Ltd., was a “go-to” location for cybercriminals to convert purloined cryptocurrency to another cryptocurrency, Fisco noted.

The Japanese exchange points out that the thieves took advantage of Binance’s previously flexible policy. New users before could open accounts and transact in amounts below 2 BTC without going through a KYC process.

Moreover, hackers managed to create several different accounts on Binance to exchange their legal cash into other cryptocurrencies. This shows that the exchange’s KYC and anti-money laundering (AML) protocols did not measure up to industry standards. Now, the aggrieved crypto exchange is seeking payment for its losses.

As per the complaint, Fisco claims that it notified Binance multiple times about the stolen funds in 2018 yet to no avail. Therefore, Binance is being accused of failing to stop the Cryptocurrency money laundering process which had funds transferred from Binance addresses and accounts.

Reasons for Pressing Charges in California

Fisco is seeking a jury trial over its allegations to Binance as they pursue the legal action at the Northern California District Court. The petitioner decided to press charges in California for specific reasons.

Most of Binance’s infrastructure is located in California. In addition to this, Binance servers are utilizing the Amazon Web Services (AWS). It is therefore possible that the Californian AWS servers hold more data than the others.

Furthermore, Binance uses California-based custodians for cold storage. Fisco hopes this will persuade the court to conduct a trial in California.

Read More: Get the latest news about Binance exclusively on CoinQuora’s Binance News section.

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