A lawsuit accusing Binance of involvement in an $8 million pig butchering scam has been dismissed by a United States Court.
The U.S. District Court for the Eastern District of Texas received a recent filing stating that Judge Amos Mazzant granted Binance’s motion to dismiss the case. The dismissal was based on the court’s determination that it lacked personal jurisdiction and the plaintiff failed to present a valid claim.
The plaintiff, Divya Gadasalli, a resident of Texas, fell victim to a pig butchering scam orchestrated by Jerry Bulasa, whom she met on the popular online dating platform Tinder. In a pig butchering scam, criminals establish digital romantic relationships with victims to gain their trust and persuade them to make financial investments. Initially, the fraudsters typically request small investments to build confidence before eventually seeking larger sums. Gadasalli believed she was in a romantic relationship with Bulasa and trusted his claims of being a successful crypto investor, leading her to invest substantial amounts through him.
Over the course of a year, Gadasalli invested more than $8 million. Despite Bulasa’s assurances that her assets had grown to approximately $10 million, she was unable to withdraw any funds from her account. After enduring numerous excuses from Bulasa regarding her withdrawal difficulties, Gadasalli filed a lawsuit in March 2022, naming Bulasa and his accomplices, Dong Lian and Danyun Lin, as defendants. The lawsuit also mentioned Binance and crypto exchange Poloniex as entities involved in the case.
Binance Denies Allegations of Fund Mismanagement
Binance has issued a denial in response to allegations of mismanagement of customer funds. The denial follows a Reuters report claiming that the crypto exchange mingled customer funds with the company’s own revenue.
According to the Reuters report, Binance was accused of violating U.S. banking regulations that require the segregation of client funds. It alleged that between 2020 and 2021, the exchange routinely mixed its corporate revenue with customer funds, a practice that occurred on a daily basis. Citing information from three insiders familiar with Binance’s financial operations, Reuters claimed that the majority of mingling took place in accounts held at Silvergate Bank, which is now bankrupt. The amount involved was purportedly in the billions of dollars.
The report stated that user funds were transferred to a Silvergate account belonging to Key Vision Development, a company based in Seychelles and owned by Binance CEO Changpeng Zhao. Binance allegedly informed Silvergate that the Key Vision account’s primary purpose was to collect non-U.S. dollar contributions from clients.
Additionally, the report alleged that another Silvergate-based account associated with the CEO’s Cayman Islands firm was used to convert funds into Binance USD, a token pegged to the U.S. dollar. However, the Reuters report clarified that it found “no evidence that Binance client funds were lost or misappropriated.”