Alabama Court Faults Structure of Binance Lawsuit

TLDR

• A federal judge in Alabama dismissed a terrorism financing lawsuit against Binance and BAM Trading Services.
• The court ruled that the plaintiffs failed to meet federal pleading standards.
• Judge Chad W. Bryan described the amended complaint as a shotgun pleading.
• The complaint grouped defendants without clearly identifying specific actions by each entity.
• The court ordered the plaintiffs to file a revised complaint by April 10, 2026.

A federal judge in Alabama has dismissed a terrorism financing lawsuit against Binance entities and Binance. US operator BAM Trading Services. The court found that the plaintiffs failed to meet federal pleading standards and criticized the structure of the complaint. However, the judge allowed the plaintiffs to file a revised complaint by April 10, 2026.

U.S. Magistrate Judge Chad W. Bryan issued a 19-page order in the Middle District of Alabama on Tuesday. He ruled that the amended complaint failed to present clear and specific claims against each defendant. As a result, he described the filing as a “shotgun pleading” under federal law.

The lawsuit came from victims and relatives of attacks linked to Hamas and Palestinian Islamic Jihad. The plaintiffs sought damages under the Anti-Terrorism Act, the Alien Tort Statute, and common-law negligence claims. They named Binance Holdings, former CEO Changpeng Zhao, and BAM Trading Services as defendants.

Court Faults Structure of Complaint Against Binance

Judge Bryan stated that the complaint exceeded 100 pages and relied on hundreds of allegations. However, he said the plaintiffs grouped the defendants without identifying specific actions by each entity. He also wrote that the filing failed to clarify which plaintiffs asserted particular claims.

“The First Amended Complaint has been determined to be legally and factually deficient,” Judge Bryan wrote in the order. He explained that federal rules require a “short and plain statement” of each claim. Therefore, he said the complaint did not meet basic pleading standards.

The judge said the structure forced the court and defendants to review hundreds of paragraphs to understand the claims. He stated that the plaintiffs must separate each legal theory into individual counts. He also ordered them to identify which plaintiff brings each claim against each defendant.

The court did not dismiss the case with prejudice at this stage. Instead, Judge Bryan directed the plaintiffs to file a revised complaint by April 10, 2026. He warned that failure to correct the deficiencies could result in dismissal of the action.

Separate Manhattan Ruling also Addresses Binance claims

The Alabama ruling followed a recent decision from a federal court in Manhattan. In that case, hundreds of victims linked to attacks involving Hamas and Hezbollah sued Binance. The Manhattan court dismissed the lawsuit after finding insufficient connection between the exchange and specific attacks.

The New York court focused on whether the plaintiffs plausibly linked Binance’s conduct to their injuries. It ruled that the complaint failed to establish that connection under terrorism financing laws. As a result, it dismissed the claims against the exchange.

By contrast, the Alabama court centered its decision on procedural defects. Judge Bryan emphasized the need for clear factual allegations connecting each defendant’s conduct to the alleged injuries. He instructed the plaintiffs to present a structured and compliant filing.

The order arrives as Binance continues to face legal scrutiny related to alleged illicit finance risks. Recently, the company filed a defamation lawsuit against The Wall Street Journal. The exchange denied reports that it dismantled an internal investigation into crypto flows tied to Iranian networks.

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