According to the report, Binance exchange was dragged into a lawsuit in which the exchange took part in a pig butchering scam on the platform. However, Binance denied the allegation and motioned for a dismissal of the case. The case was later dismissed in favor of the exchange’s petition.
In the lawsuit, plaintiff Divya Gadasalli claimed that she lost about $8 million in a recent pig butchering scheme launched on Binance. She, along with several victims named in her filings accused the giant crypto exchange of being a mastermind of the scam.
For context, Pig butchering scams occur when fraudsters text potential victims through dating apps and form a relationship with them. Afterward, they persuade their victims to invest in fake projects and loot their funds.
Stating in her lawsuit, Gadasalli reportedly claimed Binance and other defendants which included Jerry Bulasa, Danyun Lin, and Dong Lian were all involved in the scam. Meanwhile, a report last year claimed that Jerry Bulasa was a dummy name and that the two other defendant’s origins were not clear.
Court Dismiss Plaintiff’s Claims Using PACER Rulings
Despite the plaintiff’s claims, a federal court in Texas dismissed the case on the bases of a PACER filing on Monday.
According to the report, Gadasalli’s lawyer claimed that Binance supported fraudulent activity.
However, the judge presiding over the case declared that Gadasalli’s lawsuit didn’t have jurisdiction and it failed to establish a proper claim. In addition, the court said the complainant couldn’t provide a single piece of evidence that Binance was involved in the scam as claimed.
Afterward, the court approved Binance’s motion and canceled the lawsuit. It also pointed out that the giant exchange was vindictive based on many factors, including the fact that Binance has been prohibited from operating in Texas for a long period now.
In the plaintiff’s lawsuit document, Gadasalli claimed that the exchange encouraged users to use VPNs (Virtual Private Networks) on Binance.US. It claimed that these VPNs allow customers to access the platform from regions where cryptocurrency exchanges are restricted from operating.
However, the Judge wrote in his verdict that the liberty for individuals to use VPNs to bypass certain embargoes will not be sufficient to fulfill the exceptional criterion and subject a defendant to the personal judgment of a court.
Regulators Strive To Tackle Pig Butchering Scams
The name Pig butchering which originated from Asai, was reportedly dubbed from the process of fattening a pig before butchery. The name has become prevalent in the crypto industry in recent years.
The United States Secret Service Office in San Francisco and Bay Area Enforcement Allied Computer Team stated in a Reddit AMA that the most recently committed scam is the pig butchering fraud. Reported showed that REACT, a crypto cybersecurity firm has probed more than 50 cases of Pig Butchering so far.
Regulatory agencies are warning investors to be vigilant as the rate of crime has been on the rise. Initially, the crypto scem revenue was about $11 billion, however, it has reduced drastically to about $6 billion this year.
Furthermore, the regulators seized about $112 million in funds linked with pig butchering frauds in April 2023, according to a report. A US lawyer, Martin Estrada commented on the scamming event.
Estrada stated that investment scams are nothing new however, the use of crypto to scam people is a different ball game. He argued that the crypto pig butchering scam proves challenging for regulators in their bid to recover victims’ lost funds which have totaled billions over the years.