Fisco Files Complaint Against Binance for Facilitating Money Laundering

Fisco has accused Binance of allowing stolen funds from Zaif to be laundered through its exchange.

Fisco Cryptocurrency Exchange, Inc, a Japanese cryptocurrency exchange, has filed a complaint against Binance Holdings Ltd. in a United States Court, claiming that Binance facilitated the laundering of stolen funds from Zaif, a cryptocurrency exchange that was hacked in 2018.

According to a document seen by Finance Magnates filed through the United States District Court of the Northern District of California San Jose on Monday, Fisco is seeking relief from Binance, including compensatory damages, expectancy damages, and restitution in an amount to be determined at trial.

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Specifically, Fisco, which purchased Zaif shortly after the hack in 2018, claims that thieves laundered more than $9 million of the stolen cryptocurrency through Binance, one of the largest crypto exchanges in the world. Now, Fisco seeks payment from Binance for those losses. 

In the complaint, Fisco outlined that after hackers stole around $63 million worth of cryptocurrency, analytics of the publicly available bitcoin blockchain traced the stolen bitcoin to a single address. From that address, the thieves laundered 1,451.7 bitcoin through Binance, the cryptocurrency exchange alleges.

Fisco goes on to claim that a significant portion of the laundered crypto was sent to an address belonging to Binance, and the laundered amount was worth around $9.4 million at the time.

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“There is a simple reason why the thieves laundered the digital loot they stole through Binance: despite being one of the world’s largest cryptocurrency exchanges, Binance’s ‘know your customer’ and anti-money laundering protocols are shockingly lax and do not measure up to industry standards,” Fisco said in its complaint.

“The thieves were able to launder the bitcoins stolen in the Zaif hack through Binance because Binance failed to implement security measures that were standard throughout the industry.”

Fisco Alleges Binance Knew of Stolen Funds Were on the Exchange

Furthermore, Fisco alleges that Binance had knowledge that the stolen virtual currency from Zaif had been transferred to addresses and accounts on Binance’s exchange and that the Malta-headquartered crypto exchange had the ability to freeze the accounts and stop the transactions involving the stolen funds.

“Binance could have done so before some or all of the stolen cryptocurrency left the Binance exchange, but it did not do so. Binance either intentionally or negligently failed to interrupt the money laundering process when it could have done so,” Fisco accuses.

The Japanese exchange claims in the complaint filed on Monday with the US court that as a result of Binance’s lack of action, both Zaif’s customers and the exchange itself suffered financial harm.

Finance Magnates has reached out to Binance for a comment on the accusations. As of the time of publishing, we have not yet received a response.

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