A Japan-based Crypto Firm Is Blaming Binance’s KYC Protocol for Aiding Money Laundering Activities


As per the filed complaint by the Japan-based crypto firm Zaif this September 14th to the District Court of California, Binance’s Know Your Customer (KYC) protocol practically aided the hack attack that cost it over $9 million worth of Bitcoin (BTC) last 2018. Zaif, represented by its parent company, Fisco, claims that the weak and seemingly useless KYC protocol implemented by Binance alongside its excessive daily withdrawal cap facilitated the money laundering activity that compromised it years back.

The plaintiffs are now seeking complete compensation from Binance for these purportedly large-scale losses. They believe that it has the authority to identify and deny stolen assets because the blockchain is traceable but decided to do nothing. Furthermore, Fisco notes that cybercriminals are purposefully taking advantage of the lax anti-money laundering (AML) and KYC protocols of Binance because of its incompetent nature.

The lawsuit points out new users’ capability to readily start new accounts and immediately transact using it without committing any meaningful identity info or amount of BTC as the main reason it pointed the finger toward Binance’s protocols. As per the plaintiffs, this negligence may be intentional as it creates a platform wherein cybercriminals can thrive and easily pull off any illicit activities.

With all that being said, Binance is notoriously known for being extremely difficult to pin down and sue. Even though the plaintiffs feel confident that the case will go alongside their favor, it is still terribly hard to point out whether this issue may even budge Binance at all, considering its seemingly shaky claims. Binance has yet to respond to the controversial allegations set upon it as of press time.


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