Lawsuit Alleges Binance Enabled Terrorist Crypto Transfers; Company Denies Claims

A federal lawsuit filed in North Dakota accuses Binance and its founder Changpeng "CZ" Zhao of facilitating over $1 billion in cryptocurrency transactions linked to U.S.-designated terrorist organizations, including Hamas and Hezbollah, in the wake of the October 7, 2023, attacks in Israel according to reports. The 284-page complaint, brought by more than 300 victims and their families, alleges the crypto exchange knowingly enabled illicit transfers totaling $50 million post-attack and hundreds of millions prior according to data.

The lawsuit, which cites the Justice Against Sponsors of Terrorism Act, claims Binance's platform allowed terrorist groups to move funds with impunity despite a 2023 guilty plea and $4.3 billion penalty for prior money laundering violations according to reports. Even after the settlement, the complaint alleges Binance continued to screen only outgoing transactions, enabling groups like Hamas's military wing to raise Bitcoin without scrutiny according to data. The firm's compliance systems, it argues, remain insufficient to prevent such activity according to CNBC.

Zhao, who served four months in prison before being pardoned by President Donald Trump, stepped down as CEO in 2023 according to data. The lawsuit also implicates senior executive Guangying Chen, who was not charged in the earlier case according to reports. Binance has denied the allegations, stating it complies with international sanctions laws and has "executed a wide-ranging transformation" of its compliance programs according to reports.

Legal battles over jurisdiction are ongoing. The North Dakota case hinges on two transactions traced to IP addresses in the state, while New York and Alabama courts also review similar claims according to data. In a prior ruling, New York Judge John Koeltl found plaintiffs had "alleged plausibly" that Binance "knowingly and substantially assisted" the attacks, though the company contested the decision according to data.

The complaint further ties Binance to illegal gold smuggling networks in Venezuela, with a 26-year-old woman accused of handling $177 million in crypto for Hezbollah's gold operations according to data. U.S. enforcement agencies, including FinCEN, previously flagged Binance's failure to report Hamas-linked fundraising efforts according to data.

As the case unfolds, victims seek triple damages under the Anti-Terrorism Act, which holds companies liable for "substantial assistance" in terrorist acts according to reports. Binance's defense argues its services lack a "definable nexus" to terror activity and that plaintiffs failed to prove direct links to the attacks according to reports.