What To Know:
- A US federal judge allowed a civil Anti-Terrorism Act lawsuit against Binance to move forward, opening discovery and exposing the exchange to potential liabilities exceeding $3 billion.
- The court found plaintiffs plausibly alleged Binance knowingly facilitated transactions linked to Hamas and other designated groups, rejecting the exchange’s bid to dismiss the case at an early stage.
- The ruling marks the first time a Tier-1 crypto exchange has faced a civil ATA claim beyond pleadings, setting a precedent that could increase legal and compliance risks across the crypto industry.
A US federal court has allowed a civil lawsuit against Binance, tied to allegations of terrorist financing, to proceed under the United States Anti-Terrorism Act. The ruling paves the way for discovery and leaves the world’s largest crypto exchange open to possible liabilities exceeding $3 billion if plaintiffs win.
Binance Terror Financing Lawsuit Advances
They say Binance knowingly brokered transactions for Hamas and designated groups, enabling funds to travel despite clear risks. To this point, the court agreed that the disputes were sufficiently detailed as to warrant further investigation and denied Binance its earlier attempt to have the case dismissed. The ruling is the first time a Tier-1 crypto exchange has been compelled to deal with a civil Anti-Terrorism Act claim beyond the pleading stage.
Until now, similar cases either stalled or failed to reach discovery. Such a barrier has now been crossed. A motion to dismiss would be something that stops a lawsuit before any evidence goes to the record. In denying it, the judge also indicated that the accusations are more serious than mere speculation. The plaintiffs argued that Binance did have knowledge of terrorist-linked operations conducted by such groups as Hamas, Hezbollah, Palestinian Islamic Jihad, and Iran’s Revolutionary Guard Corps.
In the written order, the judge described Binance’s defense that it applied neutral treatment to all customers, including sanctioned actors, as “somewhat breathtaking.”
The court also addressed the legal status of Binance founder Changpeng Zhao. Zhao’s earlier guilty plea and subsequent presidential pardon were raised by the defense as grounds for shielding the company from further consequences. The judge rejected that view. Instead, the ruling noted that these developments could be interpreted as reinforcing claims that Binance was aware of compliance failures and risk exposure.
Far from closing the chapter, the court suggested those events may strengthen the plaintiffs’ argument. With the dismissal denied, the lawsuit now enters discovery. This phase carries heavy implications. Binance will be required to produce internal emails, compliance reports, transaction monitoring data, and communications with high-risk counterparties. Risk alerts, chat logs, and internal assessments that were never disclosed during earlier regulatory settlements could now become part of the public record. For a company that has historically guarded its internal operations, this represents a significant shift.
The financial stakes are equally high. The plaintiffs allege more than $1 billion in terror-linked flows passed through Binance. Under the Anti-Terrorism Act, damages can be tripled.
That means potential exposure north of $3 billion, a figure that would be comparable to — or greater than — many of the steepest penalties ever levied on crypto companies. Binance isn’t the only blockchain company going to be affected, the ruling has ripple effects throughout the rest of crypto. The case creates a new legal pathway for victims of terrorism to pursue civil claims against exchanges that have not prevented sanctioned activity. Platforms that have a lengthy anti-money laundering history or are already exposed to high-risk jurisdictions could face similar scrutiny.
The legal standard here could be repeated in other courts. This development also changes the context regarding compliance. For years, legal enforcement against crypto companies has mainly concerned regulatory fines and negotiated settlements. Binance introduces another dimension to this story. Civil liability tied directly to acts of terrorism brings both reputational and financial risks on a large scale to the stage. It also raises the bar for standards of due diligence, sanctions screening, and transaction monitoring even with business that took place before modern standards had fully matured.
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