Federal Judge Tosses Claims Linking Binance to Terror Financing
Legal disputes over cryptocurrency platforms continue to test the limits of liability for financial technology companies. A U.S. federal judge dismissed claims linking Binance and its founder Changpeng Zhao (CZ) to terrorist attacks, according to a report by Reuters on March 6. The ruling addresses allegations tied to crypto transactions connected to militant groups.
Binance shared on social media platform X after the ruling became public:
“We are pleased to see that the court in this case correctly dismissed these meritless claims.”
“Binance takes compliance seriously and has no tolerance for bad actors on its platform,” Binance added.
U.S. District Judge Jeannette Vargas determined that the plaintiffs failed to demonstrate that Binance or Zhao intentionally supported or participated in terrorism-related activity. Vargas explained that the defendants did not culpably associate themselves with the attacks, participate in them as something they wanted to bring about, or attempt to ensure their success.
Court filings described an extensive complaint alleging that hundreds of millions of dollars in cryptocurrency moved through Binance accounts linked to foreign terrorist organizations. Groups referenced in the case included Hamas, Hezbollah, Islamic State, Palestinian Islamic Jihad, and al Qaeda, alongside entities connected to Iran’s Revolutionary Guard. Plaintiffs argued that the exchange’s alleged failure to prevent these transfers enabled financial flows supporting violent operations across multiple regions. However, the judge determined that the relationship described in the complaint amounted only to standard platform use, where unidentified actors maintained accounts and conducted transactions on the exchange in what the ruling characterized as an arm’s-length relationship.
Zhao’s attorney, Teresa Goody Guillen, a former attorney with the U.S. Securities and Exchange Commission (SEC), stated on X that CZ and Binance received what she described as an important development regarding claims filed against them. She said the court dismissed every claim brought by the plaintiffs, determining they failed to link Zhao or Binance to financing any terrorist activity. “We are pleased that the Court recognized the lack of credibility in the claims. Even better if Plaintiffs stop bringing baseless claims in the first place!” she opined.
CZ also commented on X:
“False news is temporary. Truth always comes with time. Adding some logic here. There is absolutely zero (0) motive for any CEX to have anything to do with terrorists.”
“I imagine they don’t actively trade (no fee revenue). They may try to deposit and then immediately withdraw (these don’t generate any revenue either),” CZ further said.
Lawmakers in Washington have also increased scrutiny of the exchange. On Feb. 24, Senator Richard Blumenthal (D-CT) initiated a Senate inquiry into Binance over alleged sanctions violations tied to Iranian entities. Moreover, 11 Democratic senators urged the Treasury Department and Department of Justice to investigate the exchange’s sanctions and anti-money laundering compliance, warning that illicit finance risks linked to digital asset platforms could threaten U.S. national security. The lawmakers wrote: “We write to express our concern with illicit finance risks presented by the digital asset firm Binance Holdings Ltd. (Binance). Recent reports raise serious concerns about the strength of illicit finance guardrails at Binance’s digital asset exchange.”
FAQ 🧭
- Why did the federal judge dismiss the lawsuit against Binance?
The court found plaintiffs failed to show Binance or Changpeng Zhao intentionally supported or participated in terrorism-related activity. - Does the ruling mean Binance faces no further legal risk in this case?
No, plaintiffs were allowed to amend their complaint and could refile if they address the legal issues identified by the judge. - What role did cryptocurrency transactions play in the allegations?
Plaintiffs claimed hundreds of millions of dollars moved through Binance accounts tied to groups labeled as foreign terrorist organizations. - Why is this ruling significant for crypto investors?
The dismissal highlights limits on platform liability, which could influence how courts treat legal claims against major crypto exchanges.
