The founder of Binance, Changpeng CZ Zhao, and various executives are now the subjects of a broad-based suit initiated by over 300 victims and families of victims of the October 7 attacks in Israel.
It is alleged in the filing that Binance was aware of facilitating crypto transactions associated with Hamas, Hezbollah, and other US-designated terrorist organizations, which would cast new attention on why the exchange had previously failed to comply with regulations.
Terror financing claims
The case is a lawsuit that comes after an extensive examination of the complaint, which is more than 284 pages in nature, under the Justice Against Sponsors of Terrorism Act. According to the plaintiffs, Binance has conducted transactions of more than one billion dollars on accounts associated with terrorist activity both before and after the 2023 attacks. They also claim that hundreds of millions of dollars found their way to Hamas and its affiliates using the platform of Binance before the series of events that claimed the lives of 1,200 people and resulted in 250 hostages.
The complaint alleges that Binance executives were aware of the presence of these groups on the exchange and failed to take them off. According to it, Binance developed its system in a manner that would appeal to users who would want to transfer money without supervision and disregard obvious dangers.
The claims go beyond the guilty plea of Binance
The complaint builds upon the claims that emerged as CZ entered a guilty plea in a money laundering contravention in 2023. Binance settled on a 4.3 billion dollar fine and acknowledged past compliance lapses. CZ stepped down as CEO and was later sentenced to four months in jail, to be pardoned by the president. Guangying Chen, the top executive, was not implicated in the case.
Victims also argue that Binance still permitted suspicious transfers following the plea. They cite wallet activity that is affiliated with Hamas, Hezbollah, Palestinian Islamic Jihad, and the Revolutionary Guard Corps of Iran. The case claims that Binance was aware that these accounts were still operating, and they even financed activities on the company after it signed its deal with the United States authorities.
The exchange is also associated with the complaint regarding gold smuggling in Venezuela. It describes accusations of gold mining and exporting to Iran and crypto funding Hamas and Hezbollah. One woman in Venezuela supposedly ran 177 million of crypto on the network and took out 43 million dollars in cash.
The US enforcement associates Bitcoin usage with Hamas
Earlier evaluations by the Justice Department and FinCEN stated that Binance knew that Hamas was raising funds using Bitcoin. According to them, the exchange did not submit the necessary suspicious activity reports. The anti-money laundering measures of platforms and the possible financing of terrorists should be reported under US legislation.
Additional jurisdiction issues presented in the North Dakota case involve the mention of two transactions that were associated with local IP addresses. In New York and Alabama, other related suits are still going on. In a New York case, a judge believed that the claims made were plausible and reconsideration was possible. Binance refutes these findings and says that its services are not directly related to attacks.
In the Anti-terrorism Act, victims are entitled to triple damages. This case now mounts pressure on Binance as the courts will decide on jurisdiction as well as whether the company had a significant role to play in aiding illicit transfers.
