Binance indulges in Promoting Laundering of $9M, accuses Japan’s Fisco

Binance has been sued in a U.S. court by Japanese crypto exchange Fisco alleging that Binance's KYC protocols are Lax leading to money laundering.

By Komal Joshi · Sep 17, 2020 . 5min read

Japanese crypto exchange, Fisco is adamant on suing Binance for ostensibly promoting the laundering of approximately $9 million of stolen cryptocurrency. Fisco filed a 33-page  lawsuit in the Northern California District Court on Sept. 14. It accuses that Binance’s know-your-customer (KYC) policies enable cyber criminals to transform stolen crypto from Zaif exchange to other crypto or cash. Fisco solicits a jury trial and more than $9 million in damages, plus interest from the hack’s time. It also demands compensation for the time and money spent in pursuit of the property.

Earlier in 2018, Zaif was hacked and lost approximately $63 million worth of cryptocurrency, including bitcoin, at the time. Crypto exchange Fisco is the owner of the Zaif. Fisco alleges hackers who hacked Zaif ultimately washed 1,451.7 bitcoin through the crypto exchange Binance, referring blockchain analytics. The laundered bitcoin values at around $9.4 million at the time. Recently, those bitcoins are worth more than $15 million. 

The Trials to Take Place in California Courts

Fisco obliges that the case should be brought to trial in California. The reason behind these being not only regional victims but also crucial parts of Binance’s businesses located in the U.S. State. However, Binance claims that it has no conventional headquarters globally. Contrarily, Fisco claimed Binance utilizes Amazon Web Services (AWS) to host its servers and select the AWS data centre it chooses for its operations. Further, Fisco states that Binance has hired half a dozen employees in California.

Binance’s KYC and Anti-Money Laundering Protocols Turning Sloppy?

According to the lawsuit, Fisco claims that Binance’s KYC and anti-money laundering protocols are surprisingly vague. It does not match the industry standards. Fisco alleges that Binance’s KYC policy enabled new users to open accounts and transact on the exchange in amounts below two bitcoins without rendering any essential identification.

It further elaborates that Zaif contacted the Binance staff quickly after the hack. It entreated them to freeze transactions and accounts, including the stolen bitcoin. However, it knowingly or ignorantly did not interfere in the money laundering process.

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