Binance Legal Woes Compound in Class Action

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


Aleksandr Khmeliov/Shutterstock, modified by Blockworks


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 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.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Vertex.jpg


The proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains. Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances. Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.


Partnering with EtherFi and Angle, the fully on-chain perp DEX features bespoke collateral



Gavin Wood introduced the next evolutionary step for the Polkadot network: the Join-Accumulate Machine, or JAM


The side events were the places to be at Consensus 2024, according to attendees


Also, who’s come out swinging in the spot ether ETF fee war — and who could undercut them


I know it is not in their nature, but US regulators could learn a lot by researching the digital asset frameworks that overseas regulators have already gotten right


Also, the ETF hype train can count out at least one member