Binance faces a lawsuit that alleges the cryptocurrency platform ‘knowingly facilitated’ transactions carried out by Hamas before the group attacked Israel on October 7, 2023, when 1,200 people were killed and 250 hostages were kidnapped.
More than 300 victims and family members of the October 7 attack have sued Binance, co-founder Changpeng Zhao and senior executive Guangying Chen under the US Anti-Terrorism Act’s Justice Against Sponsors Act provision. They claim that Binance has enabled more than $1 billion in transactions carried out by Hamas, Hezbollah and other entities designated as foreign terrorist organizations by the US.
“The lawsuit details how Binance knowingly facilitated hundreds of millions of dollars that helped those responsible for the atrocities of the October 7th attack,” said Lee Wolosky, attorney for the victims, in a statement. “When a company chooses profit over even basic counterterrorism obligations, it must be held accountable — and it will be.”
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The lawsuit, made public on Monday in North Dakota federal court, details more transactions allegedly linked to Hamas than were disclosed by the U.S. in 2023, when Binance pleaded guilty to violating anti-money laundering laws and agreed to pay $4.3 billion in fines. Zhao also pleaded guilty, stepped down as CEO and served four months in prison. President Donald Trump pardoned him last month. Chen was not charged.
While Binance has not commented on the pending litigation, a spokesperson stated that “we fully comply with international sanctions laws, consistent with other financial institutions.”
Zhao did not respond to requests for comment.
Hamas’ October 2023 attack on Israel triggered a brutal two-year war in Gaza that has killed some 69,000 Palestinians, according to Gaza’s Hamas-controlled health ministry. Other Iranian-backed groups participated in the attack on Israel, including Lebanon’s Hezbollah and Yemen’s Houthis, creating a multi-front war. An unstable ceasefire has been in effect in Gaza since the beginning of October.
Venezuelan gold smuggling
Binance and Zhao now face four lawsuits in the US alleging they aided and abetted Hamas. But the 284-page complaint in North Dakota offers far more details than others about digital wallets allegedly linked to Hamas, Hezbollah, Palestinian Islamic Jihad and Iran’s Islamic Revolutionary Guard Corps.
The company “intentionally structured itself as a haven for illicit activity, and knew full well that specific accounts controlled by terrorist organizations were among its customers,” according to the complaint. Assets in these accounts “could foreseeably be used to commit terrorist attacks,” it states. Some of the activity occurred after Binance pleaded guilty, according to the lawsuit.
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The lawsuit alleges, for example, that criminal organizations in Venezuela illegally mined gold and smuggled it to Iran, where it was used to finance terrorist activities by Hamas and Hezbollah. It cites a 26-year-old Venezuelan woman who, according to the victims, “serves as a front for Hezbollah’s gold smuggling network” and received US$177 million in cryptocurrencies, withdrawing US$43 million in cash.
When Binance pleaded guilty in 2023, it acknowledged in a blog post its “responsibility for historic criminal compliance violations” while also stating that it was “systematically working to restructure our organization and people, update our systems, and set a new industry standard in compliance.”
At the time, the Department of Justice and the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) said many officials were aware of the consequences of allowing millions of illegal transactions.
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New York case
They said Binance knew that the al-Qassam Brigades, the military wing of Hamas, used Bitcoin transactions to raise funds for the Iran-backed Islamic group. Binance also did not file suspicious activity reports with the US regarding Hamas fundraising, according to FinCEN.
Hamas is considered a terrorist organization by the US, European Union and other governments.
Under US law, Binance had a duty to prevent designated terrorist groups from accessing the US financial system by implementing an anti-money laundering program, conducting customer due diligence, and filing suspicious activity reports. By intentionally avoiding these regulatory requirements, Binance created a system that allowed Hamas and other groups to move cryptocurrencies freely, according to the North Dakota lawsuit.
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The question of where victims can sue Binance, which is not based in the US, is the subject of legal dispute. Two cases are pending in New York and one in Alabama. The new complaint cites at least two transactions executed by IP addresses in Kindred, North Dakota.
In a case in New York, U.S. District Judge John Koeltl ruled on February 25 that the plaintiffs “plausibly alleged” that Binance “knowingly and substantially assisted” in the October 7 attacks, and that they were “generally aware that they were playing a role in the general terrorist activities of Hamas and Palestinian Islamic Jihad.” He ordered an investigation into the facts regarding jurisdiction.
Binance challenged Koeltl’s decision, saying he incorrectly applied the law on aiding and abetting, and that the plaintiffs failed to show the company’s connection to the attacks.
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“Binance is an exchange that offers its services to more than 100 million users worldwide, its services have no ‘definable nexus’ to any terrorist attack, and the plaintiffs have not come close to identifying anything that could change that,” its lawyers said in an April 11 court document.
In the Alabama case, a judge denied Binance’s request to transfer the case to New York.
Under the Anti-Terrorism Act, a defendant can be liable for treble damages for aiding and abetting “an act of international terrorism” if he provided “substantial assistance” to such acts. Plaintiffs in the North Dakota lawsuit include survivors of the attacks, family members and estates of those killed.
Among them are the families of Hersh Goldberg-Polin, an Israeli-American hostage murdered by Hamas in Gaza; Itay Chen, an Israeli-American soldier in the Israel Defense Forces (IDF) whose body was returned to Israel this month; Eyal Waldman, Israeli philanthropist whose US-born daughter, Danielle, was killed at the Nova music festival during the October 7 attacks; and Yechiel Leiter, Israel’s ambassador to the US, whose son was a soldier killed by Hamas.
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