Families of Hamas Victims Claim Binance Enabled Terrorist Financing

TLDR

• More than 300 families of Americans killed or injured in Hamas attacks filed a lawsuit against Binance and Changpeng Zhao in federal court in North Dakota on Monday
• The lawsuit claims Binance’s weak controls, pooled wallets, and limited identity checks allowed users tied to Hamas to move over $1 billion through the exchange from 2017 to 2023
• Plaintiffs allege the exchange “deliberately” and “consciously” enabled financial crimes on an “industrial scale” while trying to shield Hamas customers from U.S. regulators
• The lawsuit identifies specific account holders including Ali Mohammad Alawieh, the son of a Hezbollah chief, and a Palestinian Islamic Jihad operative who opened an account in October 2020
• Binance told Reuters it complies “fully with internationally recognized sanctions laws” but declined to comment on the lawsuit

Binance and its co-founder Changpeng Zhao are facing a new federal lawsuit filed Monday in North Dakota. The case involves allegations that the exchange enabled crypto transactions linked to Hamas over a six-year period.

More than 300 families of Americans killed or injured in Hamas attacks brought the lawsuit. They claim Binance’s corporate structure and compliance practices allowed users tied to terrorist groups to move funds through the platform.

The plaintiffs allege Binance lacked proper controls from 2017 through at least 2023. The lawsuit points to weak customer verification, pooled wallets that mixed user assets together, and limited internal oversight.

Former Ambassador Lee Wolosky represents the victims in this case. He previously served as Director for Transnational Threats on the U.S. National Security Council under Presidents Clinton and Bush.

The lawsuit claims the exchange relied on pooled wallets, limited record-keeping, and weak identity checks. These practices made it hard to determine who was transacting on the platform, according to the plaintiffs.

Exchange Operations Under Scrutiny

The attorneys representing the 306 American plaintiffs claim Binance allowed large volumes of sanctioned money to move undetected. They argue the exchange’s lax controls contributed directly to financing the attack.

The lawsuit identifies specific account holders on the platform. One was Ali Mohammad Alawieh, identified as the son of a Hezbollah chief. Another account belonged to a 25-year-old Palestinian Islamic Jihad operative who opened his account in October 2020.

Photos from Agence France-Presse and Reuters show the PIJ militant at a Hamas operative’s funeral. This evidence forms part of the plaintiffs’ case against the exchange.

Hamas Attack and Crypto Usage

The Hamas assault on October 7, 2023, resulted in over 1,200 deaths. At least 809 civilians died in the attack, according to a U.N. Human Rights Council report citing Israeli authorities.

Around 252 people were taken hostage during the incursion. The families of these victims and those killed make up the plaintiffs in this lawsuit.

Cryptocurrency has become a growing tool for terrorist organizations. A recent study found that crypto is becoming a preferred method for transnational terrorist and organized criminal networks.

In 2019, Hamas engaged in crypto donation campaigns. This led to the U.S. seizure of several websites and 150 crypto accounts.

The Wall Street Journal reported in October 2023 that cryptocurrency wallets connected to Hamas received about $41 million between 2020 and 2023. Wallets connected to Palestinian Islamic Jihad received as much as $93 million over a similar period.

This lawsuit joins other civil actions against Binance involving terrorist financing claims. Previous cases include Raanan et al. v. Binance Holdings Limited in the Southern District Court of New York and Rosenberg et al. v. Binance Holdings Ltd.

Changpeng Zhao and Guangying Chen could not be reached for comment. The lawsuit identifies Chen as Binance’s “de facto chief financial officer” and a close associate of Zhao.

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