Victims Sue Binance in Landmark Test of Crypto's Terror Accountability

Hamas 2023 Attack Victims Sue Binance, CZ Over $1B in Terrorism Financing

Victims of Hamas' October 2023 attack on Israel have filed a federal lawsuit against cryptocurrency exchange Binance and its founder Changpeng Zhao (CZ), alleging the platform facilitated over $1 billion in transactions for the militant group and other U.S.-designated terrorist organizations. The complaint, filed in North Dakota federal court, names 306 American plaintiffs, including relatives of those killed, injured, or taken hostage during the attack. It accuses Binance of enabling Hamas, Hezbollah, Palestinian Islamic Jihad, and Iran's Revolutionary Guard Corps to move funds through its platform, including more than $50 million in transactions after the October 7 incursion.

The lawsuit alleges Binance "intentionally structured itself as a refuge for illicit activity" and failed to implement adequate anti-money laundering (AML) controls despite a 2023 guilty plea and $4.32 billion penalty for violating U.S. sanctions laws. Zhao, who served a four-month prison sentence before receiving a presidential pardon from Donald Trump in October, is also named as a defendant. The plaintiffs argue that Binance's pooled wallets, weak identity checks, and limited record-keeping allowed users to obscure their activities, shielding terror-linked accounts from regulators.

The complaint highlights specific examples, including a Venezuelan woman who allegedly operated a Brazilian livestock company linked to $177 million in deposits and $130 million in withdrawals through a Binance account opened in 2022. Forensic evidence also connects Binance activity to accounts in Gaza, Lebanon and even a small North Dakota town near Fargo. Binance not only knowingly provided financial services to Hamas; it actively tried to shield its Hamas customers and their funds from scrutiny, the filing states.

Binance has faced mounting legal pressure over its role in facilitating transactions for sanctioned entities. In 2023, the exchange admitted to operating an unlicensed money-transmitting business and paid $4.3 billion in penalties to U.S. authorities. Zhao's guilty plea and subsequent pardon have drawn scrutiny, with critics arguing that the crypto industry remains vulnerable to exploitation by bad actors. The exchange declined to comment on the lawsuit but reiterated its compliance with "internationally recognized sanctions laws".

The case marks one of the most aggressive legal challenges against a crypto exchange over national security concerns. If successful, the plaintiffs seek compensatory and triple damages. Their legal team, led by former U.S. National Security Council official Lee Wolosky, has framed the suit as a test of corporate accountability in the digital asset sector. "When a company chooses profit over even the most basic counterterrorism obligations, it must be held accountable-and it will be," Wolosky stated.

The lawsuit adds to a broader debate about the crypto industry's ability to monitor cross-border transactions amid rising geopolitical risks. Binance and other major exchanges have faced calls to strengthen compliance measures, particularly after revelations of their use by terrorist groups and sanctioned regimes. The outcome could set a precedent for future litigation targeting financial institutions accused of enabling terrorism through lax oversight.