Binance founder Changpeng Zhao (CZ) is facing a new wave of legal trouble, as families of victims of the October 7, 2023 Hamas attack on Israel have filed a lawsuit in U.S. federal court, accusing him and the crypto exchange of facilitating funds for terrorist groups.
The complaint, filed Monday in Fargo, North Dakota, alleges that Binance and its executives, including Zhao and senior figure Guangying “Heina” Chen, helped move millions of dollars in cryptocurrency to organizations such as Hamas, Hezbollah, Iran’s Islamic Revolutionary Guard Corps, and Palestinian Islamic Jihad.
More than 300 American plaintiffs joined the action, claiming family members were killed, injured, or kidnapped during the October 7 attack or in related incidents afterward. The plaintiffs are represented by former U.S. ambassador Lee Wolosky and three major law firms.
According to the Financial Times, the lawsuit asserts that Binance gave “substantial assistance” to militant groups by allowing them to shift funds through its exchange without adequate oversight.
“Binance intentionally structured itself as a refuge for illicit activity,” the complaint said. “To this day, there is no indication that Binance has meaningfully altered its core business model.”
Allegations of over $1 billion in illicit transactions
The nearly 300-page filing claims Binance’s network was used to transfer over $1 billion in crypto assets to and from accounts connected to designated foreign terrorist organizations. Plaintiffs allege that after the October 7 attacks, more than $50 million in crypto was moved to wallets tied to militant groups, while Binance’s own wallets allegedly sent over $300 million before the attack and more than $115 million afterward to addresses flagged on the blockchain for terror links.
The lawsuit states that Binance’s corporate structure, weak compliance framework, and use of pooled wallets made it difficult for regulators or law enforcement to identify suspicious transactions. It also accuses Zhao of deliberately building a system designed to evade scrutiny and limit traceability.
“Binance not only knowingly provided financial services to Hamas; it actively tried to shield its Hamas customers and their funds from scrutiny by U.S. regulators or law enforcement—a practice that continues to this day,” according to a copy of the lawsuit provided by the plaintiffs’ legal counsel at Willkie Farr & Gallagher LLP.
Legal history and government settlements
This case surfaces less than two years after Binance agreed to pay over $4.3 billion to U.S. authorities in November 2023 for violating anti-money laundering and sanctions laws. The enforcement action led Zhao to serve four months in prison for failing to implement sufficient compliance controls on the platform.
Although Zhao was later pardoned by President Donald Trump in October, the new lawsuit argues that Binance’s practices persisted beyond the earlier settlement. “The company’s conduct was far more serious and pervasive than what the U.S. government disclosed,” the plaintiffs’ filing claims.
Other civil actions have also targeted Binance and Zhao over alleged terror financing links, including Raanan et al. v. Binance Holdings Limited in the Southern District of New York and Rosenberg et al. v. Binance Holdings Ltd.
Binance responds to accusations
In response, Binance said it could not comment on the pending lawsuit but emphasized that the company complies with all international sanctions and financial crime regulations.
The exchange said:
“For context, the heads of the U.S. Treasury’s FinCEN and OFAC have confirmed that cryptocurrency is not widely used by Hamas terrorists.” Binance’s spokesperson added that the platform “follows all sanction laws just like traditional financial institutions.”
Following the October 7 attack, Israeli authorities ordered crypto exchanges to freeze addresses linked to Gaza. Binance confirmed it had subsequently blocked a small number of accounts in compliance with those directives.
Broader scrutiny of crypto and terrorism financing
The lawsuit underscores the growing focus on how crypto platforms manage compliance and detect suspicious finance flows tied to global terrorism. U.S. authorities have repeatedly warned exchanges about the risks of money laundering through digital assets, particularly when platforms operate across multiple jurisdictions with limited oversight.
In a statement to Decrypt, Wolosky said,
“We believe these allegations make clear that Binance bears liability for the October 7 attacks. Binance must be held accountable, and it will be.”
As scrutiny mounts, the case could become a test of how U.S. courts address crypto-related terrorism financing claims, setting new precedents for global compliance standards across the digital asset industry.
Oleksii Shumak
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