Binance Lawsuit Alleges 'Refuge for Illicit Activity' Enabled $1B Terror Financing

Binance, the world's largest cryptocurrency exchange, faces a new lawsuit from over 300 victims and families of the October 7, 2023, Hamas attack on Israel, alleging the company "knowingly facilitated" crypto transactions for the militant group and other U.S.-designated terrorist organizations. The 284-page complaint, filed in North Dakota federal court, claims Binance enabled more than $1 billion in transactions linked to Hamas, Hezbollah, and Iran's Revolutionary Guard, even after pleading guilty in 2023 to anti-money-laundering violations and paying a $4.3 billion criminal penalty.

The lawsuit, brought under the Justice Against Sponsors of Terrorism Act (JASTA), accuses Binance founder Changpeng Zhao and executive Guangying Chen of intentionally structuring the exchange as a "refuge for illicit activity." It alleges that Binance's platform allowed terrorist groups to move funds with impunity, including $50 million in transactions to Hamas-linked accounts after the October 7 attack. The complaint also highlights a Venezuelan woman's account, which allegedly received $177 million in crypto deposits and withdrew $130 million, serving as a front for Hezbollah's gold smuggling network.

Binance's compliance failures predate the 2023 guilty plea. The Department of Justice and FinCEN previously noted that Binance employees were aware of the risks posed by allowing illicit transactions. Despite restructuring efforts post-2023, the lawsuit argues the exchange has not meaningfully altered its core business model. "To this day, there is no indication that Binance has meaningfully altered its core business model," the complaint states.

The case joins three other U.S. lawsuits targeting Binance for alleged Hamas support. It also underscores a broader regulatory crackdown on cryptocurrency platforms. The U.S. Attorney's Office for the District of Columbia recently launched the Scam Center Strike Force to combat transnational crypto fraud, including schemes involving North Korea and Southeast Asian criminal networks. The Strike Force has already seized over $400 million in scam-related funds and is pursuing an additional $80 million.

Binance declined to comment on the lawsuit but reiterated in a statement that it "complies fully with internationally recognized sanctions laws." Zhao, who served a four-month prison sentence for the 2023 plea deal and was pardoned by President Donald Trump in October, has not responded to the new allegations according to reports.

The legal action could have significant implications for the crypto industry. If successful, it would establish a precedent for holding exchanges liable under U.S. anti-terrorism laws for facilitating transactions with designated groups. It also highlights the challenges regulators face in policing decentralized financial systems, where transactions can be difficult to trace and enforce as research shows.