Binance is sued by Japanese crypto exchange Fisco

[TrevorS]

Binance is sued by Japanese crypto exchange Fisco for allegedly facilitating the laundering of $9 million

Crypto exchange Binance has been sued in a U.S. court by Japanese crypto exchange Fisco for allegedly facilitating the laundering of more than $9 million of stolen cryptocurrency.

On Monday, Fisco filed a 33-page complaint in the Northern District Court of California, saying that Binance's "lax" know-your-customer (KYC) policies allowed cybercriminals to convert stolen crypto from Zaif exchange to other crypto or cash. (Fisco is the owner of the Zaif).

Zaif was hacked in September 2018 and lost around $63 million worth of cryptocurrency, including bitcoin, at the time. Fisco says in the complaint that "thieves who hacked Zaif eventually laundered 1,451.7 bitcoin through Binance," citing blockchain analytics. The laundered bitcoin was valued at approximately $9.4 million at the time. Today it is worth more than $15 million.

Fisco says Binance's KYC and anti-money laundering (AML) protocols are "shockingly lax and do not measure up to industry standards." Specifically, Fisco says, Binance's KYC policy allowed new users to open accounts and transact on the exchange in amounts below two bitcoins without providing any meaningful identification. "The thieves broke the stolen bitcoin into thousands of separate transactions and accounts, all valued below the 2-bitcoin threshold...In short, Binance served as both a receptacle and transmitter of criminal funds," reads the complaint.

https://www.theblockcrypto.com/post/77776/binance-fisco-lawsuit-allegedly-facilitating-money-laundering-9-million

[malevolent]

Things like that is probably why eventually even Binance will require everyone without exceptions to undergo KYC verification.

[Potato Chips]

Looks like an attempt to minimize the damage. Since there's little to no chance of getting the money back from the hackers, they're trying to get them from indirect parties that could be liable in the law. plus they filed it after a significant amount of time has passed.

[bbc.reporter]

Things like that is probably why eventually even Binance will require everyone without exceptions to undergo KYC verification.

Agreed. However, does this solve the issue? The skeptical me speculates that some exchanges help some criminal organizations launder their dirty money for cleaning. HSBC and other banks do it, I reckon cryptocoin exchanges have also been doing it.

[malevolent]

Agreed. However, does this solve the issue? The skeptical me speculates that some exchanges help some criminal organizations launder their dirty money for cleaning. HSBC and other banks do it, I reckon cryptocoin exchanges have also been doing it.

I mean, there even used to be exchanges created solely for that purpose, so I wouldn't be at all surprised. Capital controls evasion is another major incentive.

[CaVO32]

Agreed. However, does this solve the issue? The skeptical me speculates that some exchanges help some criminal organizations launder their dirty money for cleaning. HSBC and other banks do it, I reckon cryptocoin exchanges have also been doing it.

I mean, there even used to be exchanges created solely for that purpose, so I wouldn't be at all surprised. Capital controls evasion is another major incentive.

This kind of scenario is very possible in all other crypto exchanges not only in Binance, as most of them have certain levels before you will submit KYC, like 2 or 3 btc limit per day. Which can be very well exploited by these hackers because they can slowly get in and out those amount without submitting any identification docs. While there are still exchanges that don't require any KYC at all. So right now, after all these years, they only identified Binance to be one of the exchanges that have their stolen btc. I guess there's more to this story that we don't know yet.

[Darker45]

Things like that is probably why eventually even Binance will require everyone without exceptions to undergo KYC verification.

Agreed. However, does this solve the issue? The skeptical me speculates that some exchanges help some criminal organizations launder their dirty money for cleaning. HSBC and other banks do it, I reckon cryptocoin exchanges have also been doing it.

It doesn't, of course. After all, KYC could be bought. Although it at least makes it harder for launderers to do their thing in Binance.

But, on the other hand, it will also discourage a lot of users who are exploiting Binance's 2-BTC unverified limit, including myself. I bet a lot of Binance users are against KYC and they are just making sure their transactions do not exceed the non-KYC limit.

As to certain exchanges possibly having a hand in money laundering, I guess so to. Money laundering must be a profitable business, although crypto offers a much simpler process, or even a DIY, than with fiat.

[Jawhead999]

This thread has been discussed before Binance sued for money laundering over stolen bitcoin.

After this issue I doubt CZ still allow 2 BTC withdrawal limit without KYC, probably he will force all user to doing verification. If you still have coin inside Binance, it's better to move it ASAP before it too late.

[malevolent]

This thread has been discussed before Binance sued for money laundering over stolen bitcoin.

After this issue I doubt CZ still allow 2 BTC withdrawal limit without KYC, probably he will force all user to doing verification. If you still have coin inside Binance, it's better to move it ASAP before it too late.

It's probably not the first time someone tried to launder stolen/scammed bitcoins via binance, but every such event can only increase pressure on Binance to become stricter their KYC policies (Binance causing problems to a user making withdrawals to a Wasabi wallet came as a surprise to quite a few).

[bbc.reporter]

Agreed. However, does this solve the issue? The skeptical me speculates that some exchanges help some criminal organizations launder their dirty money for cleaning. HSBC and other banks do it, I reckon cryptocoin exchanges have also been doing it.

I mean, there even used to be exchanges created solely for that purpose, so I wouldn't be at all surprised. Capital controls evasion is another major incentive.

I was not only speculating about capital controls evasion. There are also the Chinese triads and the corrupt people in the communist party of China who want to launder wealth.

I also speculate that one of their most favorite cryptocoins to use is Litecoin. It has low development, only a small community but the volume is very high in Chinese exchanges.