Victims of Israeli Terror Attacks Sue Crypto Exchange Binance, Claiming It Enabled Fundraising for Hamas

News | May 30, 2024 By:

On Friday, May 17, 2024, an amended complaint was filed in the United States District Court for the Southern District of New York alleging that major cryptocurrency exchange Binance and its founder Changpeng Zhao provided substantial support to terrorist organizations and enabled them to raise funds through virtual currency transactions.

The complaint, filed on behalf of dozens of American victims and family members of victims of terrorist attacks carried out in Israel on October 7, 2023, alleges that Binance knowingly allowed groups like Hamas and Palestinian Islamic Jihad to use its platform, processing thousands of transactions worth nearly $60 million. Analysis of blockchain data reportedly showed transactions between Binance and wallets belonging to these groups, as well as money service businesses in Gaza linked to terrorist financing.

According to the complaint, Binance was made aware as early as 2019 through law enforcement and compliance partners that its exchange was being used to solicit donations and fund terrorist activities but failed to take meaningful action by filing suspicious activity reports, freezing accounts, strengthening controls, or cooperating fully with regulators. The plaintiffs argue this lack of oversight and compliance helped enable the deadly attacks in October 2023.

Records cited in the complaint, including resolutions from regulators like FinCEN, the SEC, and CFTC, outline how Binance and Zhao actively avoided anti-money laundering protocols and misled authorities about the exchange’s operations and user base in the U.S. The complaint portrays a “culture of contempt” for regulators at Binance, alleging Zhao and others mocked compliance efforts internally.

Zhao pleaded guilty last year to charges including operating an unlicensed money transmitter business. At his sentencing in April 2024, Zhao acknowledged his mistake in failing to establish proper safeguards. The victims are now seeking damages from Binance and Zhao under the U.S. Anti-Terrorism Act, arguing their conduct materially contributed to the attacks in question.

The allegations raised are significant given the scale of Binance, once the world’s largest crypto exchange by volume, and the seriousness of enabling terrorism financing through cryptocurrency. The outcome of this case could shape how such platforms are regulated and held accountable for illicit activity on their networks going forward.

Please contact BlockTribune for access to a copy of this filing.