TLDR
- 306 American families are suing Binance and founder Changpeng Zhao over allegedly facilitating over $1 billion in transactions for Hamas and other terrorist groups
- The lawsuit claims Binance used pooled wallets, weak identity checks, and limited record-keeping from 2017 to 2023 that allowed sanctioned money to move undetected
- Plaintiffs allege CZ directed employees to hide customer locations and shield Hamas accounts from U.S. regulators and law enforcement
- The complaint identifies specific Binance account holders including the son of a Hezbollah chief and a Palestinian Islamic Jihad operative
- Binance settled with U.S. authorities for $4.3 billion in 2023 over anti-money laundering violations, and CZ received a presidential pardon from Trump last month
Binance and its founder Changpeng Zhao are facing a federal lawsuit filed by families of Americans killed or injured in Hamas attacks. The complaint accuses the crypto exchange of facilitating over $1 billion in transactions for terrorist organizations.
The lawsuit was filed Monday in federal court in North Dakota. It represents 306 American families affected by Hamas attacks, particularly the October 7, 2023 assault that killed over 1,200 people and took around 252 hostages.
The plaintiffs claim Binance created a system between 2017 and 2023 that allowed users tied to Hamas and other designated terrorist groups to move funds through the exchange. The complaint states Binance “deliberately” and “consciously” enabled financial crimes on an “industrial scale.”
According to the filing, Binance relied on pooled wallets that commingled user assets. The exchange maintained limited records and used weak identity verification processes. These practices made it difficult to track who was transacting on the platform.
The lawsuit alleges CZ directed employees to disguise customer locations to mislead regulators. The complaint states Binance “actively tried to shield its Hamas customers and their funds from scrutiny by U.S. regulators or law enforcement.”
The filing identifies specific Binance account holders with alleged terrorist ties. One account belonged to Ali Mohammad Alawieh, identified as the son of a Hezbollah chief. Another account was linked to a 25-year-old Palestinian Islamic Jihad operative who opened his account in October 2020.
Binance’s Previous Legal Settlement
Binance faced U.S. enforcement actions in 2023 over anti-money laundering and sanctions violations. The company agreed to pay $4.3 billion to settle with authorities.
CZ pleaded guilty to failing to maintain an effective AML program as part of that settlement. He resigned as CEO and served four months in a minimum security prison in Lompoc, California in 2024.
President Donald Trump pardoned CZ last month. The pardon came as part of the administration’s approach to the crypto industry.
Former Ambassador Lee Wolosky represents the victims in the current lawsuit. He previously served as Director for Transnational Threats on the U.S. National Security Council under Presidents Clinton and Bush. Wolosky told reporters that Binance “must be held accountable.”
The attorneys representing the plaintiffs claim Binance’s conduct was “far more serious and pervasive” than what U.S. authorities disclosed during 2023 enforcement actions. They argue the exchange’s lax controls directly contributed to financing the October 2023 attack.
Research shows terrorist groups increasingly use cryptocurrency for financing. Hamas launched crypto donation campaigns in 2019, leading to U.S. seizure of several websites and 150 crypto accounts.
Cryptocurrency Use by Terrorist Organizations
Cryptocurrency wallets connected to Hamas received about $41 million between 2020 and 2023 according to Wall Street Journal reporting from October 2023. Wallets linked to Palestinian Islamic Jihad received as much as $93 million during a similar timeframe.
Binance responded to Reuters stating the platform complies “fully with internationally recognized sanctions laws.” The company declined to comment specifically on the lawsuit. Zhao and Guangying Chen, identified in the lawsuit as Binance’s “de facto chief financial officer,” could not be reached for comment.
The lawsuit joins other civil actions against Binance over alleged terrorist financing. These include Raanan et al. v. Binance Holdings Limited and Rosenberg et al. v. Binance Holdings Ltd., both filed in federal court in New York.
Mehow Pospieszalski, founder of crypto wallet platform AmericanFortress, told reporters that exchanges face technical limitations in tracking transactions. He noted that even with customer verification, exchanges cannot link verified identities to sending or receiving addresses on blockchain networks.
The complaint alleges Binance operated through offshore entities controlled by CZ with no fixed headquarters. This structure created an environment where identifying individual users or tracing specific transfers became difficult as platform activity grew.
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