US Court Dismisses Binance, CZ Terrorism Financing Lawsuit

Former Binance CEO Changpeng “CZ” Zhao said centralized crypto exchanges have “zero motive” to assist terrorists after a US court dismissed a lawsuit accusing the exchange of facilitating terrorist financing.

In a post on X, Zhao argued that the economics of crypto trading make such activity illogical for exchanges. “There are absolutely zero (0) motive for any CEX to have anything to do with terrorists,” Zhao wrote, adding that such actors are unlikely to generate trading revenue and may only deposit funds briefly before withdrawing them.

The comments followed a ruling by the US District Court for the Southern District of New York that dismissed claims brought by hundreds of victims and relatives of victims of terrorist attacks. The lawsuit alleged that Binance, Zhao and Binance.US operator BAM Trading Services helped terrorist groups move funds through cryptocurrency transactions.

According to the court filing, the plaintiffs represented 535 individuals linked to victims of 64 attacks carried out between 2016 and 2024. The incidents were attributed to groups including Hezbollah, Hamas, ISIS, al-Qaeda and Palestinian Islamic Jihad.

Related: Binance slams US Senate probe over Iran as based on defamatory reports

Victims seek damages from Binance

The plaintiffs argued that the attackers or affiliated organizations benefited from transactions conducted on the Binance exchange. They sought damages under the US Anti-Terrorism Act and the Justice Against Sponsors of Terrorism Act, which allows victims to pursue claims against entities accused of assisting terrorist acts.

Judge Jeannette A. Vargas dismissed the case after finding that the complaint failed to establish a sufficient connection between Binance’s operations and the attacks themselves. While the filing described alleged compliance failures and illicit activity on the platform, the court said the plaintiffs did not plausibly link the exchange’s conduct to the specific attacks that caused their injuries.

The decision effectively ended the case at the pleading stage. The judge also said that “any amended complaint shall be due within 60 days.”

Related: Binance CEO accuses WSJ of defamation over Iran sanctions report

Binance denies Iran transaction claims

The recent win for Binance comes at a time when the exchange is under growing scrutiny over transactions tied to sanctioned entities. On Friday, the exchange pushed back against allegations raised by a group of 11 US senators, rejecting claims that it facilitated transactions tied to Iranian entities.

In a letter sent Friday to Senators Richard Blumenthal and Ron Johnson, Binance said the February inquiry relied on reports that were “demonstrably false” and lacked credible evidence. The scrutiny came after media reports alleged it processed more than $1 billion in crypto transactions linked to Iranian entities Hexa Whale and Blessed Trust and fired employees who raised concerns internally.

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