Alleged Misallocation of Funds

Four American citizens have filed a lawsuit against multiple U.S. government agencies, including the Department of Justice (DOJ), for allegedly mishandling the $4.3 billion settlement received from Binance in November 2023.

The plaintiffs argue that the DOJ, the Commodity Futures Trading Commission (CFTC), U.S. Attorney General Merrick Garland, and the Treasury Department, along with its agencies, the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC), collectively failed to give directives to allocate the settlement funds to the appropriate unit, in this case, Victims of State Sponsored Terrorism Fund.

The lawsuit, filed in a federal court in Washington D.C., claims that under the Victims of State Sponsored Terrorism Act, all criminal proceeds and a significant portion of civil proceeds from cases like Binance's should go to the fund.

However, the plaintiffs, Micheal Grover Coe, Joseph Paul Englehardt, Andre Lynn Twin, and Yvonne Dora Wade, allege that since the settlement in November, the defendants have only deposited about $898.6 million into the fund.

Instead of focusing on the State Sponsored Terrorism Fund, the government agencies are planning to divert another $1.5 billion into a separate fund for crime victims.

They argue that this move violates federal law. The four Americans are fighting to ensure the government does the right thing to support more families and victims.

Plaintiffs Demand Proper Allocation

The lawsuit seeks a court order requiring the DOJ and other defendants to deposit all eligible Binance settlement proceeds into the Victims Fund.

Binance admitted to all criminal charges the DOJ and other agencies brought against the company and its executives in 2023, including violations of U.S. sanctions and the International Emergency Economic Powers Act (IEEPA). As part of the settlement, the company agreed to pay over $4.3 billion in fines and forfeitures.

Binance founder Changpeng Zhao (C.Z.) also accepted responsibility for a felony charge under the Bank Secrecy Act. The authorities alleged that C.Z. failed to implement proper anti-money laundering protocols on the platform to discourage bad actors from laundering their proceeds through Binance.

As part of the deal with the U.S. government, he also agreed to step down as CEO, pay a $50 million fine, and serve a four-month prison sentence. The Binance boss was sentenced in April and is expected to be released later this week on September 29.

DOJ to Deposit $1.5B into Fund for Crime Victims

The DOJ has stated its intention to direct at least $1.5 billion into a fund for crime victims, which the lawsuit argues violates the law.

The plaintiffs seek a court order requiring the DOJ to deposit all qualifying proceeds from Binance's settlement into the Victims Fund.

The lawsuit also names the Commodity Futures Trading Commission (CFTC), U.S. Attorney General Merrick Garland, the Treasury Department, and its agencies, including the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC), as defendants.

Binance's Role in Busting a Scam

On Wednesday, Binance revealed that it had played a pivotal role in assisting India's Enforcement Directorate (E.D.) dismantling a $47.6 million gaming scam linked to the Fiewin app.

The fraud involved luring victims into online betting and gaming, promising easy earnings before seizing their funds.

According to a press release from Cryptonews.com, Binance's Financial Intelligence Unit (FIU) provided crucial information that helped trace the funds and expose the fraud network.

On the same day, the exchange also introduced a new pre-market spot trading service, which set it apart as the first crypto exchange to offer trading of actual tokens before its official spot market listing.

Binance said the new service would allow its users to gain early exposure to new tokens, enhancing their trading strategies.

However, the service is unavailable in certain jurisdictions, including the U.S., Canada, Dubai, Japan, the Netherlands, Russia, and Spain, due to regulatory restrictions.