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Binance faces lawsuit over alleged terror financing
Binance, the world's largest cryptocurrency exchange, and its founders-including billionaire Changpeng Zhao-are being sued in the US for allegedly enabling millions in transactions linked to US-designated terrorist groups, including Hamas and Hezbollah. The lawsuit, filed in a North Dakota federal court, was brought by American victims and families of those affected by the 7 October 2023 attacks in Israel.
Allegations of deliberate non-compliance
The plaintiffs accuse Binance of knowingly facilitating over $1 billion in transfers to and from accounts tied to terrorist organizations, including at least $50 million moved after the 7 October attacks. The complaint claims Binance's policies allowed illicit funds to flow freely by only screening transactions when customers attempted to withdraw money, leaving inbound deposits unmonitored.
"By deliberately failing to monitor inbound funds, Binance ensured that terrorists and other criminals could deposit and shuffle enormous sums on the exchange with impunity," the lawsuit states. It further alleges that the company "intentionally structured itself as a refuge for illicit activity."
Binance's response and prior settlements
Binance has denied wrongdoing, asserting compliance with international sanctions laws. The company previously settled a 2023 US government case, admitting to money laundering and sanctions violations while agreeing to pay over $4 billion in penalties. At the time, Binance pledged to strengthen its anti-money laundering and sanctions compliance programs.
In a recent statement, Binance reiterated its commitment to improving compliance systems, noting that illicit transactions represent a "tiny fraction" of its total trading volume. "We remain steadfast in our commitment to working with regulators, law enforcement, and our users to protect the integrity of the global digital-asset ecosystem," a spokesperson said.
Political fallout and Trump's pardon
The lawsuit follows controversy over former US President Donald Trump's decision last month to pardon Zhao-who had pleaded guilty in 2023 to failing to maintain an effective anti-money laundering program. Trump, whose family has business ties to Zhao, later claimed he had "no idea" who Zhao was, despite his sons' involvement in the crypto industry.
Critics, including top Democrats, condemned the pardon, warning it could embolden white-collar criminals. A letter to administration officials argued the move signaled that "cryptocurrency executives and other white-collar criminals can commit crimes with impunity, so long as they enrich President Trump enough."
Next steps
The families suing Binance are seeking unspecified financial damages, to be determined in a jury trial. The case is expected to reignite scrutiny of Binance's compliance practices, particularly in light of Zhao's pardon and the company's ongoing role in global crypto markets.
