Court revives $80M Binance case tied to Bitcoin theft

Florida’s Third Appeal Court has given a user who claims $80 million in Bitcoin (1000 BTC) was stolen from the Binance platform a chance to refile a state-level lawsuit. The court found that the trial court erred 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 demands that Binance pay up

The plaintiff argues that the exchange was negligent, breached its contract, and aided in laundering stolen property by not freezing user funds as soon as the theft was reported. He wants to recover the entire amount he lost, plus interest.

Two years ago, Michael Osterer filed a class-action case on behalf of others whose assets had been stolen and allegedly laundered through Binance. A related federal money laundering case was recently moved to Florida’s Southern District, but the current ruling focuses on Osterer’s own claims under state law. 

The new case gives the plaintiff the opportunity to argue that, despite Binance Holdings Inc. being based outside of Florida, it has sufficient ties to the state for the claim to be heard in Florida courts.

The lower court had dismissed the case because it lacked personal jurisdiction. However, the appeal court argued that California law could plausibly apply and that Binance cannot be automatically excluded from jurisdiction simply because it is an offshore exchange.

Cases on Binance’s involvement in money laundering pile up

The case puts the company at risk of a revival of more lawsuits on top of several other lawsuits this year, claiming the company failed to secure or freeze stolen assets.

This case was revived after a new case that accused the company of helping send millions of dollars to US-designated terrorist organizations, including Hamas and Hezbollah. The legal action against the world’s largest crypto platform was brought by US victims of the attacks in Israel or their families two years ago.

As reported by Cryptopolitan, the lawsuit points to the transfer of more than $1 billion to and from accounts connected to organizations designated by the US as foreign terrorist groups and responsible for the 7 October attacks. Those payments included $50m sent after the 7 October attacks and at least two transactions sent from the US.

Binance had pleaded guilty and agreed to pay more than $4 billion in penalties to resolve charges of money laundering and sanctions violations brought by the US government two years ago. 

At the time, it pledged to improve its anti-money laundering and sanctions compliance programes as part of that agreement. However, even after the settlement, lawsuits claim that the company maintained a policy to only screen funds for suspicious activity when customers tried to transfer money off the platform.

A recent report by ICIJ revealed that when the company was under the supervision of court-appointed monitors, at least $408 million worth of crypto flowed to Binance accounts from Huione Group, a Cambodia-based financial firm used by Chinese crime gangs to launder proceeds from human trafficking and industrial-scale scam operations.

To that end, Binance is expected to appeal the decision or push for arbitration. The case now returns to the trial court, where the merits, negligence, contract breach, and recovery of stolen funds will once again be argued.

Additionally, the suit could set a precedent for victims of crypto thefts to challenge exchanges’ asset recovery protocols, amid rising scrutiny on platform security.

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