Binance Faces US Lawsuit Alleging Terrorist Financing Ties

U.S. plaintiffs have filed a civil lawsuit accusing Binance and its founders, including Changpeng Zhao, of aiding illicit transfers to groups designated as terrorists by the United States. The action reopens questions about the exchange’s anti-money laundering controls as regulators scrutinize the sector.

What the lawsuit alleges

The complaint, filed in federal court in North Dakota, claims Binance knowingly facilitated more than $1 billion in transactions connected to organizations designated by the U.S. as foreign terrorist groups. It asserts payments continued after the October 7 attacks in Israel and includes transfers initiated from U.S. accounts. Plaintiffs—victims and families—seek damages through a jury trial.

Context and timeline

In 2023, Binance admitted it had failed to maintain a robust anti-money-laundering program and agreed to pay more than $4 billion to resolve money-laundering and sanctions charges. The settlement included commitments to strengthen risk controls and monitoring, but the lawsuit argues weaknesses persisted beyond that agreement.

Compliance claims and company response

The suit contends Binance continued to screen inbound funds only when users moved money off the platform, allowing illicit deposits to flow with limited oversight. Binance, for its part, says it has overhauled its compliance framework and notes that illicit flows comprise a tiny portion of trading activity, stressing ongoing cooperation with regulators and law enforcement to protect the ecosystem.

Political backdrop

The case follows President Donald Trump’s recent pardon of Zhao, who had pleaded guilty to money-laundering charges in 2023. The pardon drew criticism from some lawmakers who warned it could signal leniency for crypto executives and affect enforcement signals.

Next steps

The families are pursuing damages through a jury trial. Binance declined to comment beyond reaffirming its strengthened compliance measures and commitment to regulatory cooperation.

Key Takeaways

• Plaintiffs allege Binance and Zhao facilitated over $1 billion in transfers linked to designated terrorist groups.
• The lawsuit follows Binance’s $4+ billion settlement for AML and sanctions violations in 2023.
• Binance asserts its compliance framework has been strengthened and that illicit flows represent a small share of activity.

Expert commentary

Expert opinion: The case highlights ongoing gaps between crypto platforms and enforcement, underscoring the need for stronger, auditable controls. Regulators will be closely watching Binance’s compliance trajectory.

Summary

This civil action tests Binance’s current compliance posture as it faces allegations of facilitating terrorist financing. With a jury trial on the horizon, the dispute could shape industry expectations for monitoring inflows and enforcing sanctions. Binance maintains it has strengthened controls and remains committed to regulatory cooperation.

Key insight: The lawsuit underscores persistent AML and sanctions challenges in crypto markets and the demand for robust, verifiable controls on inbound transfers. Source