Binance Legal Woes Compound in Class Action

Lawsuit presents evidence from CFTC and SEC cases against Binance, indicating use by US citizens employing VPNs

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Aleksandr Khmeliov/Shutterstock, modified by Blockworks

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After being sued by the Securities & Exchange Commission (SEC), Binance now faces a class-action lawsuit for allegedly profiting from transactions involving stolen cryptocurrency.

On June 5, law firm Silver Miller along with co-counsel Kopelowitz Ostrow filed the collective action against Binance and its US-based counterpart operator BAM Trading. 

As a perquisite, it states that there are more than 100 members of the putative class and the total amount in controversy exceeds $5 million.

Michael Osterer, a resident of New York, serves as the primary plaintiff. He alleges in a court document 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 in April 2021.

He further claimed that these funds were subsequently deposited in Binance without undergoing the necessary Know Your Customer (KYC) procedures to verify lawful ownership.

The lawsuit cites multiple allegations made in both the Commodity Futures Trading Commission’s case and the SEC’s case against Binance as supporting evidence to establish that US citizens engage in the 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.

“Binance has a strong monetary incentive to encourage, facilitate, and allow as many transactions on its exchange as possible — even transactions involving stolen cryptocurrency,” the filing states.

“Binance has turned a blind eye to the wide variety of money and cryptocurrency laundering from around the globe it knowingly facilitates through its platform.”

Binance also allowed thieves to launder stolen cryptocurrency by neglecting to establish security measures to verify the lawful ownership of cryptocurrency held in Binance accounts, the lawsuit alleges. This includes the accounts where the plaintiff’s stolen cryptocurrency was deposited.

To date, Binance has allegedly enabled money laundering by permitting deposits and withdrawals of up to 2 bitcoin per day on the Binance.com exchange without any form of identification verification, according to the case. Blockworks has reached out to Binance for comment.

The lawsuit invites US residents who have encountered an account breach resulting in crypto theft and are interested in investigating the potential laundering of stolen crypto through Binance to contact Silver Miller. It seeks compensation for the plaintiff and other class members in accordance with applicable laws.


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