Binance, the world’s largest cryptocurrency exchange, faces a new lawsuit from victims of the October 2023 Hamas attacks, alleging the platform knowingly facilitated over $1 billion in terror financing. More than 300 victims and family members have filed the legal action, accusing Binance of allowing crypto transactions to benefit Hamas, Hezbollah, and other entities designated as terrorist organizations by the United States.
These transactions allegedly occurred prior to the October 7, 2023, attack against Israel, which resulted in the deaths of over 1,100 people and the capture of 250 hostages.
The lawsuit, filed under the U.S. Anti-Terrorism Act’s Justice Against Sponsors of Terrorism Act, targets Binance as a corporate entity. It also names co-founder and former CEO Changpeng Zhao and executive Guangying Chen as defendants. Zhao recently completed a sentence in the United States for money laundering violations.
A Bloomberg report detailed the accusations, which suggest Binance failed to detect and block financial flows to armed groups despite its regulatory compliance mechanisms. The plaintiffs contend the platform’s oversight was insufficient for high-risk transactions, particularly those linked to Middle Eastern jurisdictions.
This legal challenge comes as Binance has invested billions of dollars into compliance efforts aimed at mitigating money laundering and terror financing risks.
Binance representatives have not issued immediate comments on the lawsuit. However, internal sources cited in the report indicate the company plans to defend itself vigorously. Binance is expected to argue that its Know Your Customer (KYC) protocols are among the strictest in the industry.
Financial cybersecurity experts have increasingly warned about the use of cryptocurrencies to evade international sanctions since the October 7 attacks. Platforms like Binance have pledged to combat this trend through collaborations with agencies such as the U.S. Treasury.
If successful, the lawsuit could establish a significant precedent for the cryptocurrency ecosystem. It may compel exchanges to intensify their due diligence measures and potentially expose Binance to substantial financial indemnities.
The case will proceed in federal courts in New York. Binance has faced previous regulatory litigation in this jurisdiction. The wider crypto industry is closely observing the developments, aware that an adverse verdict could erode confidence in a sector striving for regulatory legitimacy.