Binance faces flak from Fisco over money laundering allegations

Binance faces flak from Fisco over money laundering allegations

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According to a legal document published by the California Northern District Court, Fisco Cryptocurrency Exchange filed a complaint against Binance Holdings on Monday, September 14. The Fisco seeks “restitution for $9 million of stolen Bitcoin allegedly laundered through Binance”, which could include financial compensation and damages.

Fisco Cryptocurrency Exchange is a Japanese organization, which acquired Zaif, another crypto-exchange company in 2018. Zaif was hacked in the same year. Now, Fisco is shifting the blame to Binance, one of the largest cryptocurrency exchanges in the world, for allowing easy passage of stolen funds. 

Fisco purchased Zaif shortly after it was hacked in 2018 and now claims that Binance’s network allowed the perpetrators to get away with ease. In the hack, Zaif was robbed of approximately $63m worth of cryptocurrency, which was traced to a different address. Almost 1500 BTC (almost $9.5m in the day) was then laundered through Binance.

Binance’s security and KYC features lax?

Fisco claimed in its complaint that “There is a simple reason why the thieves laundered the digital loot they stole through Binance: despite being one of the world’s largest cryptocurrency exchanges, Binance’s “know your customer” and anti-money laundering protocols are shockingly lax and do not measure up to industry standards”. 

The company also spewed fire at Binance by claiming that Binance had knowledge of the money laundering process, but did not act to stop it. “Binance either intentionally or negligently failed to interrupt the money laundering process when it could have done so,” Fisco accused.

Binance, being one of the key players in the global cryptocurrency arena, has to effectively deal with these harsh allegations. If legal proceedings conclude that Binance’s lax security measures were a catalyst in the Zaif hack, then the company would have to rebuild those measures to meet industry standards. 

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