TLDR
- A Florida appeals court has reinstated a lawsuit against Binance involving the theft of $80 million in Bitcoin.
- The lawsuit claims Binance failed to freeze the stolen Bitcoin and allowed it to be withdrawn.
- Plaintiff Michael Osterer is seeking the return of the stolen Bitcoin, alleging negligence on Binance’s part.
- The case was previously dismissed due to jurisdictional issues but is now revived, with the court finding sufficient grounds for Florida jurisdiction.
Binance Faces $80M Lawsuit Over Stolen Bitcoin
A noteworthy legal battle has emerged as Michael Osterer, the plaintiff, claims that Binance failed to act promptly after his Bitcoin was stolen in 2022. Approximately 1,000 Bitcoin was stolen from Osterer’s wallet and subsequently transferred to a Binance account. Before the exchange took any preventive action, the stolen assets were converted and withdrawn. This has led Osterer to allege that Binance was negligent in its handling of the situation and breached its contractual obligations. He is now pursuing the return of the full value of the stolen Bitcoin, estimated at a staggering $80 million.
In a significant twist, the Florida Third District Court of Appeal has ruled in favor of Osterer. The court determined that the lower trial court had erred in its conclusion that it lacked personal jurisdiction over Binance. Part of its reasoning was based on Binance’s substantial U.S. infrastructure, emphasizing that its reliance on Amazon Web Services and operational presence in the U.S. allowed for sufficient grounds to bring the case forward in Florida.
Allegations of Negligence and Money Laundering
The lawsuit not only centers on negligence but also includes grave accusations that Binance facilitated the laundering of the stolen assets. Osterer argues that Binance’s failure to freeze the stolen Bitcoin directly contributed to the laundering process. He contends that the exchange’s delayed response enabled the criminals to move and withdraw the funds without interception. In a bid to amplify his legal action, Osterer is also attempting to develop the case into a class-action lawsuit, allowing other victims of similar thefts to join his legal efforts.
Legal Pressure Mounts on Binance in the U.S.
The reinstatement of this lawsuit adds to the mounting legal pressure faced by Binance in the United States. In 2023, both Binance and its founder, Changpeng Zhao, were implicated in a federal lawsuit, charged with allegedly facilitating transactions linked to terrorist organizations. The lawsuit asserted that Binance moved over $1 billion in transactions related to Hamas, claims which the exchange has flatly denied, asserting its strict adherence to international sanctions and compliance protocols.
This isn’t the first time Binance has found itself at the center of legal scrutiny. Earlier in 2023, the exchange agreed to a significant settlement of $4.3 billion concerning allegations surrounding the Bank Secrecy Act. This came after extensive investigations by the Department of Justice, which examined Binance’s compliance with anti-money laundering regulations. On top of that, the exchange also settled a case with the Commodity Futures Trading Commission for $2.7 billion.
Despite having settled these significant lawsuits, the pursuit of legal accountability against Binance continues. The growing number of lawsuits and investigations reflects a broader initiative to hold offshore crypto exchanges accountable for actions that may negatively impact U.S. investors.
Future Implications
While Binance may consider shifting this dispute into arbitration—something it has pursued in past legal challenges—the current ruling allows the $80 million lawsuit to proceed in a Florida trial court. This development not only revives Osterer’s case but may also set a precedent for others similarly affected by alleged negligence or misconduct within the burgeoning cryptocurrency landscape.
As the situation unfolds, it will be critical to observe how Binance navigates this legal ordeal and what implications it may have for the cryptocurrency exchange landscape and regulatory environment in the United States.
