Cryptocurrency exchange Binance has been sued by the families of 300 Americans who were injured or killed in the 7th October Hamas attack on Israel accusing it of supporting Hamas and other terrorist organisations. They accused the bitcoin exchange of shifting over $1 billion across accounts to support the terror groups. On 24th November, the case was submitted to a federal court in North Dakota.
Notably, Changpeng Zhao alias CZ, the founder of Binance, was pardoned by President Donald Trump around a month ago. He was found guilty of money laundering in 2023.
The lawsuit accused that Zhao and his close friend Guangying “Heina” Chen purposefully created Binance “as a criminal enterprise to facilitate money laundering on a global scale.” It outlined that Binance “pitched itself to terrorist organisations, narcotics traffickers and tax evaders as beyond the reach of any single country’s laws or regulations.”
The complaint asserted that the business disregarded basic security checks on money accessing its network and ignored alerts from its compliance vendors on dubious activities. According to a 2016 statute that permits victims of terrorism to sue foreign corporations in the United States, the case seeks damages, which will be decided at trial.
The company “knowingly sent and received the equivalent of more than $1 billion to and from accounts and wallets controlled by (foreign terrorist organisations) responsible for the 7th October attacks,” according to the complaint. It argued that the company’s actions were “far more serious and pervasive than what the US government disclosed.” Hezbollah, Hamas, Iran’s Islamic Revolutionary Guard Corps, and Palestinian Islamic Jihad (PIJ) were on the list.
The 272-page complaint claimed that as recently as this month, Binance allowed brokers in the Gaza Strip to transact with “high-risk” customers. Hezbollah commander Muhammad Abd al-Rasul Alawieh’s son Ali Mohammad Alawieh’s account, an account opened by a PIJ terrorist in Gaza, and other accounts connected to Hezbollah’s “illicit gold smuggling operations” utilising “cryptocurrency transfers made to Venezuelan and Brazilian” criminal groups were among those mentioned in the complaint.
It contended that these transfers comprised at least two transactions from the US and $50 million sent following the 7th October attacks. This amount was allegedly sent to Hamas, Hezbollah, Iran’s Islamic Revolutionary Guard Corps, Palestinian Islamic Jihad and other terrorist organizations. The complaint charged, “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,” and added that it “intentionally structured itself as a refuge for illicit activity.”
It further conveyed, “To this day, there is no indication that Binance has meaningfully altered its core business model.” The complaint stated that prior to the Hamas attack, Binance’s own company-run wallets, rather than just user accounts, sent more than $300 million and more than $115 million to accounts associated with terrorism.
Attorney Jonathan Missner pointed out, “This was not a compliance lapse; it was a business model. Our investigation shows that Binance built systems designed to evade oversight, using its off-chain network and weak controls to move enormous sums for sanctioned groups.” He represents over 70 families listed as plaintiffs in the case.
“Years before 7th October, Binance knew that Hamas, the (Islamic Revolutionary Guard Corps of Iran), Hezbollah, (Palestinian Islamic Jihad) and other terrorist organisations were all transacting regularly on its platform and nevertheless actively assisted their use of the platform. It did so at a time when Hamas, in particular, was publicly directing its donors to send funds to so-called ‘crypto wallets’ held with Binance,” the plaintiffs expressed.
More transactions with Hamas are detailed in the case than were disclosed in the 2023 settlement agreement between Binance and the Justice Department, the Treasury Department’s Financial Crimes Enforcement Network as well as other agencies. The firm made restitution and paid fines totalling $4.3 billion.
Trump pardons Zhao
Zhao had to resign as CEO of the company, pay a $50 million fine and serve a four-month prison sentence after he pleaded guilty in a money laundering case. However, he was able to resume his previous position at the exchange after President Donald Trump pardoned him in October. As part of that deal, the company promised to enhance its anti-money laundering and sanctions compliance programs at the time.
However, the lawsuit maintains that the business continued to screen funds exclusively for suspicious activity when users attempted to transfer money off the platform. “Binance not only knowingly provided financial services to Hamas; it actively tried to shield its Hamas customers and their funds from scrutiny by US regulators or law enforcement—a practice that continues to this day,” it highlighted.
Notably, Trump’s family has financial connections to Zhao but he claimed to have “no idea” about the latter. However, the president admitted that his sons were involved in the cryptocurrency market.
Trump even insisted that the Biden administration was waging a “war on cryptocurrency” and hence targeted Zhao. The White House also alleged that the businessman was attacked by US agencies despite the fact that he was not accused of fraud and his previous case had no direct victims.
Zhao, who is worth $33 billion, had admitted to breaking US money laundering regulations. The US financial system and national security were put at risk by Binance and Zhao’s “wilful violations” of US regulations, according to US officials in November 2023.
Treasury Secretary Janet Yellen had declared, “Binance turned a blind eye to its legal obligations in the pursuit of profit. Its wilful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.” A judge pronounced, “Binance’s growth and profits over compliance with US laws and regulations,” during Zhao’s trial, last year.
