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Binance Sued for Aiding the Laundering of More Than $9m Worth of Bitcoin in 2018 Hack

The world’s leading cryptocurrency exchange Binance is currently facing a lawsuit filed by Japanese crypto exchange, Fisco, for “aiding and abetting” the laundering of funds stolen from the company in a hack that occurred in 2018.

According to the report which first appeared on Coindesk today, Fisco filed the complaint against Binance yesterday in the North California District Court.

At the time of the hack, the Japanese exchange was known as Zaif. However, just a month after the company was hacked, losing over 6,000 Bitcoin and many other cryptocurrencies, it was sold to Fisco in order to compensate its users who had lost their funds as a result of the hack.

In its filing, Fisco stated that the hackers had sent more than 1,000 BTC, which was worth around $9.4 million at that time, to a bitcoin wallet address belonging to Binance.

The exchange said that the hackers had laundered the funds using Binance’s exchange platform, which allegedly had substandard Know-Your-Customer and Anti-Money Laundering policies.

The hackers had utilized the opportunity presented to them by Binance’s policy that gave new clients the chance to trade on the platform with funds that are less than 2 BTC without going through a complete identification process.

The filing read, ” the thieves broke the stolen bitcoin into seven thousands of separate transactions and accounts, all valued below the 2-bitcoin threshold. In this way, the thieves converted the stolen bitcoin into other cryptocurrencies and transmitted the value from the Binance platform.”

The Japanese exchange also alleged that Binance was fully aware that the funds were sent to its platform, but it did not stop the transfers when it had the chance to do it, either intentionally or negligently.

A great majority of cryptocurrency holders that had been affected by the 2018 hack were based in California and within the United States. Consequently, Fisco insists that the trial of the case should be held in California. 

The exchange is now demanding payment from Binance for the stolen funds that were laundered on Binance exchange as well as other punitive damages.


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