Fisco, which owns the Zaif exchange that was hacked and stolen 6,000 BTC in 2018, has sued the Binance cryptocurrency exchange for “aiding and abetting” the laundering of part of the stolen bitcoins.
According to a complaint filed by Fisco in the district court of Northern California, shortly after the Zaif exchange was stolen
6,000 BTC worth $60 million at the time of the hack in 2018, hackers sent 1,451 BTC to one of Binance’s addresses.
Japanese exchange Zaif after hacking came under the control of Fisco Digital Asset Group (FDAG) shortly before the restart. Now, Fisco claims that the attackers who hacked the exchange laundered money through the world’s largest crypto asset exchange, Binance, because of its weak KYC/AML protocols, which “do not meet industry standards.”
It is alleged that hackers took advantage of the Binance rules, which allowed new users to open accounts and perform withdrawal operations for amounts up to 2 BTC per day without having to provide any significant personal data.
“The attackers divided the stolen BTC into 7,000 separate transactions and accounts, all worth less than the 2 BTC threshold. Thus, the thieves converted the stolen BTC into other cryptocurrencies and withdrew them from Binance, ” FISCO States.
Fisco claims that because Binance “was notified and actually knew” that the stolen bitcoins were sent to its platform, It “intentionally or negligently failed to interrupt the money laundering process when it had the opportunity.”
Thus, Fisco requires Binance to pay damages equal to the amount of funds laundered through the platform in addition to other penalties and losses. According to court documents, the crypto assets equivalent to $41 million at the time of the hack belonged to Zaif clients, including those located in the United States, including California.
The case may draw additional attention to the KYC and AML procedures of cryptocurrency exchanges, as the financial action task Force (FATF) calls on global regulators to work in line with its recommendations issued last year.
Fisco argues that the case should be referred to a California court not only because the victims of the hack live in this region, but also because important components of Binance’s business are located in This US state. For example, Fisco stated that Binance uses Amazon Web Services (AWS) to host its servers and has the option to choose any AWS data center.
“According to available information, a significant portion, if not all, of the AWS servers that Binance relies on for its operations are located in the state of California,” FISCO States.
In addition, Binance has at least six employees in California, and a significant portion of Binance’s cryptocurrency reserves are stored in Autonomous vaults located in San Francisco. Fisco is seeking a jury trial to hear the case.