A lawsuit, filed in a U.S. federal court on behalf of families who lost a loved one in the October 7 Hamas terrorist attack, accuses the cryptocurrency giant Binance of "knowingly facilitating the transfer of hundreds of millions of dollars to U.S.-designated foreign terror organizations on an 'industrial scale,' helping contribute" to the terror attack, according to Jewish Insider.
According to the complaint, the largest cryptocurrency exchange in the world deliberately "failed to monitor inbound funds” from terror groups such as Hamas, Hezbollah, Palestinian Islamic Jihad, and the Islamic Revolutionary Guard Corps, thus ensuring “that terrorists and other criminals could deposit and shuffle enormous sums on the exchange with impunity.”
Weren't most of these groups under financial sanctions that would have prevented these deposits?
“Moreover, when specific customers were designated or particular accounts were subject to seizure orders, Binance allowed those customers and accounts to shift the assets into other Binance accounts, thus negating the effect of any ‘blocking’ or ‘seizing’ of the account,” the complaint states.
The platform's policy “demonstrates Binance’s deliberate and conscious effort to enable users to operate on the Binance platform and clearly helps facilitate financial crime on an industrial scale,” the filing adds.
Gary Osen, an attorney representing the plaintiffs, specializes in civil terror cases. He said in a statement to Jewish Insider, “One of our goals is to cast a public spotlight on specific ways in which the Binance platform has been used by Iran, Hezbollah and Hamas to finance terrorism.”
The 284-page complaint, filed Monday in U.S. District Court for the District of North Dakota under the Anti-Terrorism Act, targets Binance as well as its founder and former CEO, Changpeng Zhao, and Guangying Chen, a close associate of Zhao whom the lawsuit identifies as the crypto exchange’s “de facto chief financial officer.”
Zhao and Chen could not be reached for comment regarding the lawsuit.
A Binance spokesperson said the company “cannot comment on any ongoing litigation.”
“However, as a global crypto exchange, we comply fully with internationally recognized sanctions laws, consistent with other financial institutions. For context, the heads of the U.S.Treasury’s FinCEN and OFAC have confirmed that cryptocurrency is not widely used by Hamas terrorists,” the spokesperson told JI in a statement, referring to the Financial Crimes Enforcement Network and Office of Foreign Assets Control. “Most importantly, we hope for lasting peace in the region.”
Tracking international transactions can be extremely difficult. Many terrorists use the Hawala system. The sender gives money (plus a fee/commission) to a local Hawala broker, or Hawaladar, in their country. The sender then provides a password or code and the details of the recipient. The sending Hawala broker contacts a counterpart in the recipient's country and instructs them to pay the recipient. The receiving broker gives the cash to the recipient after they provide the password.
It's nearly impossible to track any money sent to terrorists in this manner. However, sending large sums of cash would be easily flagged. That's where cryptocurrency comes into play.
Binance either didn't care or wasn't very careful about where the cryptocurrency was going and who was sending it. Intent is always difficult to prove, but accounts linked to terrorists should be flagged by any financial institution, regardless of the currency they deal in.
The company’s “conduct was far more serious and pervasive than what the U.S. government disclosed during its 2023 criminal enforcement actions,” the complaint says, claiming that Binance “knowingly sent and received the equivalent of more than $1 billion to and from accounts and wallets controlled by the FTOs responsible for the Oct. 7 attacks.”
That figure, the filing states, vastly outnumbers a previous amount of more than $2,000 in known transactions for Hamas disclosed by the federal government in 2023.
In November 2023, Zhao pleaded guilty to money laundering charges and agreed to step down from his executive role. He served four months in federal prison and was pardoned last month by President Donald Trump. Binance itself also pleaded guilty to federal charges and paid over $4 billion in fines.
"Citing a complex forensic money laundering analysis, the lawsuit identifies a wide range of Binance accounts with alleged terror links and spanning multiple locales, including Venezuela, Gaza, Lebanon, and even North Dakota, where an account connected to Hamas was accessed several times from a small city outside Fargo," reports Jewish Insider.
"Every tunnel, every missile, every bullet, every attack is paid for by someone,” Izhar Shay, whose son Yaron died defending Kibbutz Kerem Shalom on Oct. 7, said. “Companies like Binance cannot keep profiting if they enable terrorists to operate in the shadows."
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The legal team estimated that the total damages sought could lead to a settlement "in the billions," according to a March report from The Times of Israel, after a judge ruled the suit could go forward.
