Exchanges face triple damages penalties for terror-financing charges

A 284-page complaint filed Nov. 24 against Binance in North Dakota federal court represents 306 American families who lost relatives in the Oct. 7, 2023, Hamas attacks.

The lawsuit demands roughly $1 billion from Binance, former CEO Changpeng Zhao, and executive Guangying “Heina” Chen, with the amount automatically tripling to $3 billion if the plaintiffs win under the Anti-Terrorism Act.

The evidence trail combines on-chain analytics tying $1 billion in flows to Hamas, Palestinian Islamic Jihad, Hezbollah, and the Islamic Revolutionary Guard Corps with Binance’s 2023 guilty plea for willfully failing to report suspicious transactions involving those organizations.

What makes extra depth to the case is both the legal mechanism and the firepower behind it.
Willkie Farr & Gallagher leads the plaintiff team, where crypto lawyer and former CFTC chair Christopher Giancarlo practices. Lead attorney Lee Wolosky co-heads Willkie’s litigation department and served as Ambassador under multiple administrations.

As Consensys lawyer Bill Hughes noted, that profile signals a strategic bet that the Anti-Terrorism Act’s (ATA) treble-damages mechanism can reach centralized exchanges when compliance failures cross into knowing assistance, not speculative litigation fishing for settlement.

The complaint builds on the February Raanan v. Binance decision, in which a Manhattan federal judge refused to dismiss JASTA claims against Binance.

Raanan cracked the door for the lawsuit walk-through with transaction data, internal compliance messages, and a 70-page section on Binance’s relationship with Iran’s Nobitex exchange, which Elliptic calls “critical infrastructure” for IRGC sanctions evasion.

For centralized exchanges rebuilding banking relationships, the case asks: when does running a platform become indispensable infrastructure for sanctioned flows?

How ATA liability works and why Twitter won where Binance might lose

The Anti-Terrorism Act lets US nationals injured by international terrorism recover triple damages from anyone who aided the attackers.

In 2016, JASTA added explicit secondary liability: plaintiffs must show the defendant had “general awareness” of their role in terrorist activities and provided “knowing and substantial assistance.”

The Supreme Court’s 2023 Twitter v. Taamneh decision ruled that merely providing “ordinary” services that terrorists also use isn’t enough. Plaintiffs must prove “conscious and culpable participation.”

Social media platforms escaped liability after Taamneh because their services were generic, and moderation efforts cut against conscious complicity.

Crypto exchanges face different math. The new lawsuit points to FinCEN’s 2023 consent order documenting that Binance “failed to report to FinCEN transactions associated with terrorist groups including Al Qaeda, the Islamic State of Iraq and Syria, Hamas’ Al-Qassam Brigades, and Palestinian Islamic Jihad.”

The complaint layers in internal messages where compliance staff allegedly said clients are “here for crime” and “we see the bad, but we close two eyes.”

That’s the pivot: from “we’re just a platform” to “you knowingly built core infrastructure for sanctioned groups.”

The off-chain architecture that makes liability stick

The complaint targets Binance’s internal mechanics, alleging that Binance built its exchange to evade AML and KYC obligations, exempt VIP customers, encourage location obfuscation, and undermine monitoring that CZ allegedly directed.

Centralized exchanges pool client crypto in omnibus wallets and record balances on internal ledgers rather than on-chain.

Deposits pool into exchange-controlled wallets, trades net internally, and only final withdrawals touch the public blockchain. That architecture, plaintiffs argue, provided “financial plumbing” for foreign terrorist organizations to move funds without leaving public blockchain traces.

FinCEN’s 2023 consent order documents Binance’s duty to maintain an AML program and file suspicious-activity reports, then catalogs systematic failures.

The complaint alleges internal alerts and vendor reports tied specific accounts to Hamas, yet Binance avoided filing SARs, protected flagged customers, and promoted “international circumvention of KYC.”

Additionally, it alleges Binance processed roughly $7.8 billion in flows with Iran’s Nobitex exchange, which handles approximately 70% of Iranian crypto volume.

Because flows settle internally on Binance’s ledger, only Binance sees the full path: FTO-linked deposit through market makers to dollar off-ramps.

The complaint details one Hezbollah-linked account with nearly $17.8 million in deposits and withdrawals in under two years, including direct flows from an OFAC-designated financier.

The complaint’s core allegation: Binance knew Hamas and related actors used the platform. Internal alerts and vendor reports flagged accounts tied to designated terrorist organizations, yet Binance allegedly chose profit over counter-terrorism obligations.

The CFTC’s 2023 complaint preserves messages where compliance staff described clients as “here for crime” and “we see the bad, but we close two eyes.”

If plaintiffs demonstrate Binance’s architecture and VIP exemptions were purposefully designed to facilitate sanctioned flows, they satisfy Taamneh’s “conscious and culpable participation” standard.

Plaintiffs allege Defendants knowingly provided substantial assistance, transferring funds, maintaining wallets, enabling access to US dollar liquidity, such that the Oct. 7 attacks were a foreseeable result.

Wolosky framed the stakes:

Where the tail risk actually lands

The immediate threat isn’t a $3 billion judgment, as discovery will take years, and Binance has jurisdictional defenses. The risk is that Raanan and the current Balva lawsuit create a template that other plaintiffs can replicate.

Even without a final ruling, litigation compounds regulatory and banking friction.

Considering 2023’s fallout, Binance.US suspended dollar deposits when banking partners cut fiat channels. BUSD collapsed from $12 billion in daily volume to under $1 billion by mid-2025.

Additionally, the European Securities and Markets Authority warned that Binance accounts for over half of global crypto trading volume, creating systemic risk if legal pressures force it to curtail operations.

Banks price legal risk into servicing decisions. Repeat ATA suits make offshore exchanges more expensive to serve, pushing stricter KYC and heavier reliance on blockchain analytics. This raises compliance costs that flow into wider spreads or fees.

Binance’s 2023 FinCEN settlement installed a five-year monitor with authority to demand real-time controls around Iran, Syria, Lebanon, and Gaza. Fragmenting liquidity in USDT, TRX, and BTC/ETH pairs becomes unavoidable.

Spot Bitcoin and Ethereum ETFs concentrate dollar access in regulated US broker-dealers, which face no AML monitor or ATA exposure.

For traders needing high-frequency access or altcoin depth, the choice sharpens: stay on offshore CEXs and absorb compliance drag, or migrate to DEXs that lack fiat on-ramps but also lack centralized chokepoints.

If the current complaint survives motions to dismiss, more ATA/JASTA suits against platforms with enforcement scars are likely to appear.

The legal mechanism for treble damages exists. The factual questions about the strength of the evidence and the extent of the assistance remain contested.

What’s been decided is that exchanges now operate in jurisdictions where terror-financing liability can triple claimed damages and where touching the dollar system via centralized infrastructure becomes costlier.

Willkie Farr’s involvement adds weight that other plaintiff firms can’t match. A firm housing crypto-friendly lawyers and a former CFTC chair lending litigation firepower to an ATA case sends a message: severe compliance failures override industry sympathy.

The families behind the complaint don’t need to win to reshape liquidity flows. They just need to survive long enough to make every exchange with similar compliance records wonder if they’re next.

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