Japanese Crypto Exchange Alleges Binance Enabled Thieves to Launder Money

According to a suit filed on Sept 14 in Northern California District Court, Fisco claims that in 2018, after it was hacked for nearly 6,000 bitcoins, the thieves routed 1,451 BTC to a Binance address—an amount worth around $9.4 million in today’s prices.

Alleged Negligence by Binance

Fisco, which was called Zaif at the time of the incident, says that thieves took advantage of a Binance policy that let new users open accounts and transact on the exchange in amounts below a two-bitcoin threshold without needing to identify themselves. The funds were allegedly broken down into increments of less than two BTC and, in this way, the cybercriminals were able to liquidate the stolen crypto into other digital assets and cash. The suit went on to claim that Binance’s “lax” know-your-customer policies were responsible for this and made the exchange a prime target for cybercriminals. Another crucial aspect of Fisco’s complaint is the assertion that Zaif contacted Binance after the hack, asking for any activity involving the stolen bitcoins to be frozen, but that “Binance either intentionally or negligently failed to interrupt the money laundering process when it could have done so.”

Damages Sought

The lawsuit alleges seven different counts including aiding and abetting fraud, negligence, and violating California’s Unfair Competition Laws. Fisco is seeking a jury trial and more than $9 million in damages from Binance, plus interest from the time of the hack, as well as “fair compensation for the time and money spent in pursuit of the property.” The case has been filed in California because, despite Binance repeatedly claiming it has no physical headquarters, it serves many customers and handles key business in the state. No stranger to lawsuits, the exchange has, so far, made no public comment on the case.