US Judge Dismisses Lawsuit Linking Binance to Terrorism Financing

US judge dismisses lawsuit accusing Binance and Changpeng Zhao of facilitating terrorist attacks through cryptocurrency transactions.

A United States federal judge has dismissed a civil lawsuit accusing a major cryptocurrency exchange of supporting terrorism. The case was against Binance and its founder Changpeng Zhao. Plaintiffs tried to connect cryptocurrency transactions made on the platform with dozens of violent attacks.

US Court Rejects Claims Linking Binance to Terror Financing

The decision was made by a U.S. District Judge known as Jeannette Vargas. According to a report by Reuters, the lawsuit was filed by 535 plaintiffs. They tried to blame Binance and Zhao for financial activity that was allegedly related to 64 terrorist attacks.

The plaintiffs alleged the attacks took place between 2017 to 2024. They alleged that cryptocurrency transactions on the exchange were funding a number of foreign militant organisations. The groups listed in the lawsuit were Hamas, Hezbollah, Islamic State, Palestinian Islamic Jihad, al-Qaeda, and Kataib Hezbollah.

Plaintiffs alleged that hundreds of millions of dollars in cryptocurrency passed through the exchange. They said those transfers contributed to the activities of these groups. The complaint also alleged billions of dollars of transactions involving Iranian users.

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However, the court ruled that the plaintiffs were unable to successfully prove that Binance or Zhao had clear responsibility. Judge Vargas said that the allegations failed to plausibly link the defendants to the attacks. Therefore, the lawsuit could not go forward based on the current evidence.

The ruling explained that the sole connection between Binance and the alleged organizations was the fact that they had accounts on the platform. According to the court, these accounts were normal customer relationships with the exchange. Such activity did not show that the person was purposeful in supporting violent acts.

Judge Vargas pointed out that financial service providers cannot necessarily become liable for the actions of their customers. The exchange offered general financial services that were available to a large number of users. Consequently, without routine transactions, there was no legal responsibility for terrorism.

Judge Says Platform Access Does Not Prove Terror Support

The court also looked at whether Binance or Zhao had knowingly assisted the groups mentioned in the lawsuit. The judge decided that no evidence existed of direct involvement in terrorist activity. Furthermore, the case contained no proof that the defendants knowingly aided those operations.

The decision highlighted an important legal principle with regard to financial services. Providing a platform for transactions does not mean approval on how users spend their funds. Therefore, normal services provided to the public cannot necessarily generate liability.

Judge Vargas explained that the relationship between exchange and users was still far. The groups mentioned purported to hold accounts and make trades using Binance. However, this arms-length interaction did not show active involvement in violent actions.

The ruling further said that the plaintiffs can still try to amend their claims. They could be able to submit a new complaint with stronger evidence. Nevertheless, the court said the existing allegations were not enough.

The lawsuit also cited past legal problems that Binance had. In 2023, the exchange was ordered to pay 4.3 billion dollars to settle charges against the United States Department of Justice. That involved anti-money laundering and sanctions violations.

Despite that earlier settlement, the judge’s decision ruled that the terrorism lawsuit did not have enough proof. Consequently, the case was rejected by the federal court. The decision underscores the difficulties that plaintiffs have had in connecting digital asset platforms to criminal activity committed by independent users.

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