User's Lawsuit Revived
Florida's Third District Court of Appeal has granted a user the opportunity to refile a state-level lawsuit seeking to recover $80 million in Bitcoin (1000 BTC) allegedly stolen from the Binance platform. The appellate court ruled that the trial court was mistaken in concluding it lacked personal jurisdiction over Binance.
According to a report by Bloomberg, the Florida Court of Appeal has allowed a state-level lawsuit to proceed against Binance.
Plaintiff's Claims Against Binance
The plaintiff asserts that Binance was negligent, breached its contract, and facilitated the laundering of stolen property by failing to freeze user funds immediately after the theft was reported. The user is seeking to recover the full amount lost, plus interest.
Two years ago, Michael Osterer initiated a class-action lawsuit on behalf of individuals whose assets were allegedly stolen and subsequently laundered through Binance. While a related federal money laundering case has been moved to Florida's Southern District, the current ruling specifically addresses Osterer's claims under state law.
The newly revived case allows the plaintiff to argue that Binance Holdings Inc., despite being based outside of Florida, has sufficient connections to the state to be subject to its courts' jurisdiction. The lower court had dismissed the case due to a lack of personal jurisdiction. However, the appeal court contended that California law could plausibly apply and that Binance cannot be automatically exempt from jurisdiction simply because it operates as an offshore exchange.
Escalating Legal Challenges for Binance
This case potentially opens the door for a resurgence of additional lawsuits against Binance, adding to several claims filed this year alleging the company's failure to secure or freeze stolen assets.
The revival of this lawsuit follows a new case accusing Binance of assisting in the transfer of millions of dollars to US-designated terrorist organizations, including Hamas and Hezbollah. This legal action against the world's largest cryptocurrency platform was originally brought by US victims of the attacks in Israel or their families two years ago.
As reported by Cryptopolitan, the lawsuit highlights the transfer of over $1 billion to and from accounts linked to organizations designated by the US as foreign terrorist groups and implicated in the October 7 attacks. These payments included $50 million sent after the October 7 attacks and at least two transactions originating from the US.
Just posted: the pardon that Trump issued to @cz_binance on Tuesday.
It wipes away CZ's conviction for failing to maintain an effective anti-money laundering program, which prosecutors said allowed Hamas, Al Qaeda & ISIS to move money using @binance.
Binance had previously pleaded guilty and agreed to pay over $4 billion in penalties to resolve charges of money laundering and sanctions violations brought by the US government two years prior.
At that time, the company committed to improving its anti-money laundering and sanctions compliance programs as part of the agreement. However, even after the settlement, lawsuits allege that Binance maintained a policy of only screening funds for suspicious activity when customers attempted to withdraw money from the platform.
A recent report by ICIJ revealed that while the company was under the supervision of court-appointed monitors, at least $408 million worth of cryptocurrency flowed to Binance accounts from Huione Group, a Cambodia-based financial firm utilized by Chinese crime gangs for laundering proceeds from human trafficking and large-scale scam operations.
In response, Binance is expected to appeal the decision or pursue arbitration. The case now returns to the trial court, where the merits of the negligence and contract breach claims, as well as the recovery of stolen funds, will be re-argued.
Furthermore, this lawsuit could establish a precedent for victims of cryptocurrency theft to challenge exchanges' asset recovery protocols, amidst increasing scrutiny on platform security.