Consumer complaint received 2022-09-15
Product: Money transfer, virtual currency, or money service — Virtual currency
Issue: Fraud or scam — 
Company: BAM Management US Holdings Inc. (MA)

This is to complain against the Binance.US and Binance.com. 

URGENCY : HIGH IMPORTANCE : HIGH [ WITHOUT PREJUDICE ] I would like to draw your attention to a fraudulent crypto scam that occurred between XXXX and XXXX of 2021 - I had sent my complaint electronically to Binance.com, and also have the FBI formally engaged in a case whereby I lost over $ XXXX USD, in which I clearly stated how this scam has affected me personally, psychologically and financially and via a crypto trace, have proven conclusively that the scammers wallet where my funds are located is clearly on your platform and I seek immediate restitution. 

I am afraid I have had to go through so much " bureaucracy '' thus far in order to catch their attention to my concerns. This really doesn't show their complaints department in a good light, to say the least ; and certainly, does not contribute to my overall satisfaction and peace of mind. My complaint is against the Binance.US and Binance.com that did not do its job properly ( could not prevent/foreseen fraud and could not conduct a proper investigation ) and not against the vulnerable customer who fell victim and lost all the savings due to the misconduct of your company. 

I feel very distressed and cheated, all because no one acted immediately and practiced their duty of care, therefore I only request what I believe to be rightfully mine, as all institutions were more than negligent in protecting my account and handling the complaints. I comprehensively provided explanations and proof to my claim, even so, neither Binance.US nor Binance.com never acknowledge my complaint, therefore, I have approached you CFPB and I would like to receive your assistance on this matter. 

General Obligation : Commencing on or about XX/XX/2021, I fell victim to a multi-layered scam operation run by XXXX  Platform which involved me making deposits for a total amount of {$850000.00} USD from my XXXX XXXX and XXXX account to fraudulent investment firm ( s ). From there, the funds were stolen and transferred to your platform to the scammers wallet ( see attached crypto trace ). 

When determining whats reasonable and fair, we should focus on the issue of liability ; common queries include, but are not limited to, the following ( i ) whether Binance.US and Binance.com did not take notice of any rule, law, or regulation, and/or possibly missed any material elements of the relevant bylaws or codes of conduct, that may have prevented them from protecting my financial safety ; ( ii ) whether by virtue of Binance.coms custodianship over my funds or by its control over them, they owed a fiduciary duty to the me and if so, whether that duty was breached ; ( iii ) whether Binance.com promoted the transaction ( s ) in question despite being aware of the nature of the transaction ( s ) in question ( iv ) whether Binance.com was in compliance with its own policies and procedures ; ( v ) whether Binance.com owed duties to myself, what the scope of those duties was, and whether Binance.com did not uphold those duties ; ( vi ) whether Binance.coms conduct was unfair ; and ( vii ) whether Binance.com has within its power the ability to, and should, compensate me for the harm that has befallen me. 

Upon identification of such unusual or suspicious activity, it is crucial that the relevant staff member adequately describe the factors making an activity or transaction suspicious, thoroughly depict the extent and nature of this activity and properly communicate to the customer that such activity meets the relevant criteria of fraud. 

In providing its services to a customer, a financial institution is required by law to exercise the care and skill of a diligent, prudent trading platform. In this case, this means that the payment service provider should not turn a blind eye to known facts pointing to a real possibility that their customer is being scammed. In other words, Binance.com must have had special knowledge of what was occurring or been alerted to a real possibility of fraud taking place. The financial institution must have known or reasonably ought to have known that I was dealing with a scammer. 

Granted, there is room for diversity of view insofar as reasonableness is concerned. Indeed, there is a sense in which the standard of care of the reasonable person involves in its application a subjective element. 

However, it must be remembered that the correct test is always reasonable care in all circumstances, not average care. The fact that most people behave in a certain way may be good evidence that the conduct is reasonable, but this is not necessarily the case. Although reasonableness is a very fluid concept, all of the evidence suggests that Binance.com did not foresee the fraud and disregarded even the most obvious dangers in this respect. 

Situations do tend to repeat themselves and it is advisable to examine previous outcomes to see how the standard of the reasonable person should be applied, and that lessons can be learnt from the errors of the past. 

Apropos of the fluidity of the concept of reasonableness, all Binance.com has done in this regard is set up a dichotomy of having or not having the legal obligation under consideration, however, that does not go one inch toward explaining why various regulatory authorities, has maintained that financial institutions can, and should, protect consumers using their systems, advanced technologies, and rich experience. 
Binance.com is obliged to take some action if it is sufficiently aware of a real possibility that a fraud may be being perpetuated. If you don't question its customers instructions or raise the possibility of a scam with the customer in these circumstances, it may be liable if the red flags indicate the customer is : particularly vulnerable, or if the possibility of fraud was serious or real, not just suspected. 
There are some recommendations to organizations for protecting customers from financial harm that might occur as a result of fraud or financial abuse ; and gives guidance on how to recognize customers who might be at risk, how to assess the potential risks to the individual and how to take the necessary actions to prevent or minimize financial harm. 
These recommendations are established as a general principle, the organization should deliver a service that : 1 ) Takes a proactive approach to minimizing risks, impact and incidences of financial harm and it sets out systems and tools for the prevention and detection of fraud and financial abuse. As a general point, it says organizations should ensure that all systems are developed using technologies and methodologies that are effective in the prevention of fraud and financial abuse, through authorized and unauthorized payments, thereby minimizing the risk of financial harm to customers. As regards to the detection of fraud and financial abuse, it says the organization : A ) should have measures in place across all payment channels and products to detect suspicious transactions or activities that might indicate fraud or financial abuse. It then lists the following examples of suspicious activity on customer accounts : a. multiple cheque books; b. sudden increased spending ; c. transfers to other accounts ; d. multiple password attempts ; e. logins from new devices, multiple geographical locations ; f. sudden changes to the operation of the account ; Unusual transactions are transactions whose amount, characteristics and frequency bear no relation to the economic activity of the customer, exceed normal market parameters or have no apparent legal justification. 
g. a withdrawal or payment for a large amount ; h. a payment or series of payments to a new payee ; i. financial activity that matches a known method of fraud or financial abuse. 
B ) organizations should have a process in place to ensure that staff make contact with the customer to verify the financial activity, challenge its authenticity, explain the nature of the suspected or detected fraud and discuss an appropriate plan of action. 
I am deeply convinced that the disastrous results that I have previously elaborated upon will continue to ensue if no responsibility is adopted by Binance.com in relation to this matter. I have also thoroughly detailed why they can not simply dismiss this problem by strictly adhering to legal technicalities which, after careful reflection, struck me as being nothing more than self-interest. Indeed, it seems to me utterly unfair to disregard fragile, sensitive, and vulnerable consumers who are afflicted by such allegedly malevolent acts, thereby keeping an unjust status-quo that is corrupting our society at its core. 

Conclusion : Based on my analysis, and as confirmed by various authorities concerned with such matters, there is abundant evidence that forward-thinking financial institutions and cryptocurrency trading platforms ought to take reasonable steps to forestall fraud, or at least mitigate its risk by using an effective risk management system, demonstrating their undisputed ability to responsibly and pre-emptively respond to questionable transactions in the digital arena. The use of such systems, largely based on newly adopted technologies aimed at effectively navigating the evolving threat landscape, is only one of several possible endeavors undertaken in this connection, alongside the application of past knowledge and experience related to popular fraudulent practices. 

Binance.coms non-observance of the fundamental principles of justice that is, to completely overlook and not even remotely try to mitigate the suffering of vulnerable consumers is inexcusable given the size of the establishment and the vast resources at its disposal as the direct result of the patronage of clients like myself. 

In summary, I respectively ask your organization to consider my points, given your personal and companywide obligation to provide a fair and reasonable investigation into the complaint. 

I look forward to your input and would gladly cooperate to reach a fair and reasonable outcome. 

Thank you.