David Edwards
A lawsuit has been filed against former Binance CEO Changpeng Zhao by three crypto investors who allege that the exchange lost their funds due to weak money laundering controls. Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at Consensys, suggests that this case could challenge the “efficacy of blockchain analytics” itself.
Hughes also questioned the credibility of the lawsuit’s main claims, calling them “dubious.”
The lawsuit, filed on August 16 in the Western District Court of Washington, accuses Binance and Zhao of allowing bad actors to obscure the link between their digital assets and the public ledger, making them untraceable. It further alleges that Binance’s lack of strong anti-money laundering (AML) and know-your-customer (KYC) protocols enabled criminals to launder stolen funds through the platform covertly.
The plaintiffs argue that a key feature of cryptocurrency is that transactions should leave a permanent, traceable record on the public blockchain.
Hughes warns that if the lawsuit progresses to discovery and pre-trial motions, it could put the effectiveness of blockchain analytics and on-chain asset recovery to the test.
