B

Binance and Changpeng Zhao Face $8.1 Million Racketeering Lawsuit Over Alleged Fraud Complicity In Pig Butchering Scam!

Pig Butchering lawsuit against Binance and Changpeng Zhao
Spread financial intelligence

Following their guilty pleas in the U.S., Binance and its former CEO, Changpeng Zhao (CZ), have been implicated in a lawsuit alleging complicity in criminal fraud schemes through lax adherence to anti-money laundering (AML) and money-transmitting regulations. The suit, demanding $8.1 million in damages, was lodged in the Boston federal court, spotlighting the personal toll of financial crimes facilitated by reputed crypto platforms such as Binance.

The plaintiff, 75-year-old Leonard Licht from Plano, Texas, accuses Binance and its affiliates of enabling a Cambodian criminal syndicate to orchestrate a so-called “pig-butchering” scam, resulting in the near-total loss of his life savings, amounting to $2.7 million, across 2021 and 2022. The syndicate allegedly lured Licht into investing in a fictitious crypto-mining operation, subsequently laundering the invested funds via Binance and effectively erasing any trace of the stolen assets.

Read the Pig Butchering lawsuit here.

The lawsuit targets Binance Holdings Ltd., its U.S. entity BAM Trading Services, and the exchange’s chief executive, Changpeng Zhao. The complaint accuses them of acting as enablers for the criminal enterprise by failing to comply with federal regulations governing money-transmitting businesses, thereby facilitating the fraud.

Aaron M. Katz of Aaron Katz Law LLC, representing Licht, emphasized the real-world consequences of regulatory non-compliance by entities like Binance, highlighting the direct impact on innocent victims such as Licht. The lawsuit seeks triple the lost amount in damages, alongside attorney fees, underlining the gravity of the allegations.

This legal challenge follows Binance and CZ‘s November admissions of violating U.S. money laundering laws and operating an unlicensed money-transmitting business. Subsequently, the exchange consented to a $1.8 billion fine and a $2.5 billion forfeiture, with recommendations for CZ to face an 18-month prison sentence.

Licht’s complaint further alleges that Binance and CZ deliberately overlooked legal obligations to prevent money laundering, directly enabling the criminal syndicate’s activities. The lawsuit criticizes the platform’s prioritization of transaction fees over compliance with U.S. regulations, which, if adhered to, could have potentially thwarted the syndicate’s operations and preserved Licht’s investments.

The case also touches on Binance’s efforts to mask its regulatory shortcomings by establishing BAM Trading Services as Binance.US, ostensibly to align with the Bank Secrecy Act. Despite these measures, the lawsuit contends that a significant portion of transactions by U.S. customers continued on the unregulated Binance platform, undermining the stated compliance efforts.

In the wake of the company’s guilty plea in related criminal proceedings, Binance had professed its commitment to legal compliance and collaboration with law enforcement to counteract scams like the one victimizing Licht. However, the lawsuit argues that these assertions only underscore Binance‘s capability to prevent such frauds through diligent adherence to AML laws and proactive cooperation with authorities.

The case, Licht v. Binance Holdings Limited et al., case number 1:24-cv-10447, presents a critical examination of the responsibilities of crypto exchanges in preventing financial crimes and protecting investors, setting a precedent for the scrutiny of platform operations within the legal and regulatory framework.

Leave a Reply

Your email address will not be published. Required fields are marked *