Binance And Founder CZ Cleared As Judge Tosses Terror Financing Case – Details

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A federal judge in Manhattan has thrown out a civil lawsuit accusing Binance, the world’s largest crypto exchange, and its founder Changpeng Zhao, popularly known as CZ, of facilitating financing for multiple terrorist attacks globally. This development represents a significant win for the Seychelles-based exchanges, whose commitment to AML/CFT principles has recently come under serious scrutiny.

Binance Not Accomplice To Terror Attack Despite Illicit Transactions, Court Rules

According to a Reuters report on March 7, around 535 plaintiffs, consisting of victims and relatives of certain terrorist attacks between 2017 and 2024, had filed a lawsuit against Binance alleging the crypto exchange enabled foreign terrorist organizations (FTO) to utilize its trading platform in funding their operations.

The complainants sued for compensation and damages, claiming that CZ and Binance allowed these FTOs, including Hamas, Hezbollah, ISIS, Al-Qaeda, the Palestinian Islamic Jihad, and Iran’s Revolutionary Guard, to move hundreds of millions of dollars in digital assets, thereby funding 64 terrorist attacks in the world. Meanwhile, they also accused Binance of allowing Iranian citizens to send billions of dollars on the exchange despite an existing US sanction that prohibits services to all residents of the Middle Eastern country.  

However, Judge Jeannette Vargas found the plaintiff’s claims lacking. In the court ruling on March 6, Judge Vargas stated that Binance and Zhao’s relationship with the mentioned FTOs was simply at “arms length” in that these entities merely executed transactions on the exchange. Furthermore, while the crypto exchange might have plausibly been aware of these transactions, the judge emphasized that the allegations failed to show direct cause between the exchange’s conduct and the specific attacks listed. 

Nevertheless, the plaintiffs have been granted 60 days to file an amended complaint, which could be presented with more concrete data centered around transaction timing, wallet owners, and possible relationships with the listed attacks.

Binance Drowning In AML/CFT Compliance Checks

Notably, the recent case dismissal comes amid a period of high scrutiny for the Binance exchange. Most recently, Democrat Senator Richard Blumenthal, a member of the Investigative panel of the Senate Homeland Security, has opened a preliminary inquiry into the exchange following reports of $1.7 billion Iran-linked transactions on the exchange. Binance has strongly denied the claims, calling the inquiry false, unsubstantiated, and defamatory.

Meanwhile, Senator Chris Van Hollen, alongside nine other lawmakers, has urged the US Department of Justice and Treasury to launch a broader probe into Binance’s sanctions and AML compliance practices. This flurry of attacks comes two years after the exchange secured an initial plea deal of $4.3 billion from both agencies after failing to implement a required anti-money laundering control system on its platform. 

Featured image from Pexels, chart from Tradingview

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