Binance and CZ Win Terror Financing Lawsuit as Legal Threshold Proves Key

A lawsuit against Binance and its founder Changpeng Zhao (CZ) alleging terror financing was recently dismissed by a U.S. court, drawing widespread attention in the industry. The lawsuit was filed by victims and families of 64 terror attacks, accusing Binance, Zhao, and BAM Trading (operator of Binance.US) of knowingly processing funds between 2016 and 2024 that flowed to several sanctioned terrorist organizations, including Hamas, Hezbollah, the Islamic Revolutionary Guard Corps, al-Qaeda, Palestinian Islamic Jihad (PIJ), and ISIS. The 891-page complaint, containing 3,189 paragraphs, claimed that approximately $56 million flowed to Hamas and $59 million to PIJ through the Binance platform, seeking triple damages under the Anti-Terrorism Act (ATA).

However, Judge Vargas stated in the ruling that despite Binance's compliance deficiencies and past services to sanctioned entities, 'knowing' or 'general assistance' alone is insufficient to constitute intentional support for specific terrorist attacks in a legal sense. The court cited the Second Circuit's 2025 precedent in Ashley v. Deutsche Bank, emphasizing that a 'non-close, Arms’ Length' transactional relationship between the platform and terrorist organizations cannot presume a subjective intention to support specific atrocities. Notably, the judge did not deny Binance's management oversights but clearly distinguished between 'regulatory violations' and 'legally accountable intent to finance terrorism.' She also mentioned that a similar case (Raanan v. Binance) in February was not dismissed, but that ruling predated the Ashley case precedent and therefore could not be used as the basis for the current case.

The plaintiffs relied on the 'fungibility' theory, arguing that the homogeneity of cryptocurrencies meant any illegal transaction could indirectly fund terrorist operations. However, the judge rejected this inference as too speculative to meet the 'direct causation' and 'specific intent' standards required by the JASTA Act. Currently, the lawsuit is not over. The judge gave the plaintiffs 60 days to file an amended complaint. To pursue the case again, the plaintiffs must provide more targeted evidence proving that Binance, in processing a specific transaction, explicitly knew and intended to support a particular terrorist attack, which is extremely difficult in a decentralized trading environment.