Federal Judge Dismisses Lawsuit Against Binance Over Alleged Terrorist Financing
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The Legal Victory for Binance in Terror Financing Allegations
In a pivotal legal decision, a federal judge in Manhattan has dismissed a civil lawsuit against Binance, the world’s leading cryptocurrency exchange, and its founder, Changpeng Zhao, also known as CZ. The lawsuit accused Binance of facilitating the funding of multiple global terrorist attacks, marking a significant victory for the Seychelles-based exchange. This outcome arrives amidst heightened scrutiny of the exchange’s adherence to Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regulations.
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Court Ruling: Binance Not Directly Linked to Terrorist Activities
A Reuters article dated March 7 highlighted that approximately 535 plaintiffs, including victims and relatives of various terrorist attacks from 2017 to 2024, filed the lawsuit against Binance. They alleged that the exchange enabled Foreign Terrorist Organizations (FTOs) to use its platform for funding their operations. The plaintiffs sought compensation, claiming that Binance and CZ allowed FTOs, such as Hamas, Hezbollah, ISIS, Al-Qaeda, the Palestinian Islamic Jihad, and Iran’s Revolutionary Guard, to transfer hundreds of millions in digital assets, allegedly financing 64 terrorist attacks globally. Additionally, Binance was accused of permitting Iranian citizens to transact billions of dollars on the platform, despite US sanctions against the Middle Eastern nation.
However, Judge Jeannette Vargas found the claims insufficient. On March 6, she ruled that Binance’s relationship with the FTOs was merely transactional. While Binance might have been aware of these transactions, the allegations did not establish a direct cause between Binance’s actions and the specific attacks. The plaintiffs have been allowed a 60-day period to amend their complaint, potentially providing more detailed evidence regarding transaction timings, wallet ownership, and possible connections to the alleged attacks.
Ongoing Scrutiny of Binance’s Compliance with Financial Regulations
The dismissal of this case coincides with a period of intense scrutiny for Binance. Recently, Senator Richard Blumenthal, a Democrat and member of the Senate Homeland Security Investigative panel, initiated a preliminary inquiry into the exchange following claims of $1.7 billion in Iran-linked transactions. Binance has refuted these allegations, labeling the inquiry as unfounded and defamatory.
Furthermore, Senator Chris Van Hollen and nine other lawmakers have called on the US Department of Justice and Treasury to conduct a comprehensive investigation into Binance’s compliance with sanctions and AML regulations. This surge in scrutiny follows a $4.3 billion initial plea deal that Binance reached two years ago with both agencies after failing to implement a robust anti-money laundering control system.
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