Dozens of families of victims from the October 7, 2023, attacks in Israel have initiated legal action against Binance, alleging that the leading cryptocurrency exchange knowingly facilitated the transfer of hundreds of millions of dollars to support terrorist operations. The lawsuit, filed in U.S. District Court in North Dakota, asserts that the exchange, led by founder and CEO Changpeng Zhao, was complicit in actions that enabled organizations like Hamas and Hezbollah to use its platform.
Highlighting a timeline of alleged negligence, the complaint states that Binance had prior knowledge of terrorist organizations, including Hamas and the Islamic Revolutionary Guard Corps, conducting transactions on its exchange. The plaintiffs claim that Binance’s executives, particularly Zhao—widely known as “CZ”—and Guangying “Heina” Chen, designed the platform to operate as a “criminal enterprise” that facilitated global money laundering.
The lawsuit contends that during a period when Hamas was openly directing its supporters to send donations via “crypto wallets” held with Binance, the exchange not only permitted such transactions but actively aided them. The families of the victims, all U.S. nationals and close relatives, are seeking compensatory damages, which they aim to triple under U.S. laws concerning international terrorism.
According to the lawsuit, Binance had a legal obligation to report suspicious activities related to the transactions of these terrorist groups through “Suspicious Activity Reports” (SARs). Instead, the company is accused of manipulating reporting practices to sidestep regulatory scrutiny. The complaint claims that following the October 7 attacks, Binance continued to handle vast sums, amounting to over $50 million, in transactions linked to entities like Hamas and Hezbollah.
In response to the lawsuit, Binance declined to comment specifically, but emphasized its commitment to complying with international sanctions and mentioned an extensive overhaul of its sanctions protocols in recent years.
The legal action follows a backdrop of significant legal turmoil for Binance and its founder. Recent federal investigations revealed failings in Binance’s anti-money laundering efforts, resulting in a record-breaking penalty of over $4.3 billion agreed upon by the company. Zhao himself pleaded guilty to a charge related to these failures and was sentenced to four months in jail. He was released in September 2024.
Additionally, the Financial Crimes Enforcement Network (FinCEN) criticized Binance for not filing necessary SARs concerning substantial transactions tied to entities classified as terrorists by the U.S. government and the United Nations.
In a political twist, former President Donald Trump pardoned Zhao on October 23, just weeks after the lawsuit was filed. Trump’s administration framed the pardon as a necessary move to rejuvenate the cryptocurrency industry in the U.S., although he later claimed unfamiliarity with Zhao’s circumstances. Notably, Trump’s family has significant financial interests in the crypto space, including investments tied to Binance.
The developments signify ongoing tensions at the intersection of cryptocurrency regulation and national security, raising concerns about the responsibilities of cryptocurrency exchanges in monitoring and reporting suspicious activities linked to terrorism.
