Key Takeaways
- US federal court threw out terrorism financing allegations brought by 535 victims against Binance, Changpeng Zhao, and Binance.US
- Victims could not establish a direct connection between the exchange’s operations and the terrorist incidents they suffered
- Judge found Binance was likely aware of terrorist activity on its platform but said general knowledge wasn’t sufficient
- Victims have 60 days to submit an amended complaint with more detailed allegations
- Binance described the decision as complete vindication, though two similar cases continue
A Manhattan federal court has dismissed terrorism financing allegations against Binance in a sweeping decision issued Friday. The lawsuit represented 535 individuals who were victims or family members of victims from 64 separate terrorist incidents.
The legal action targeted Binance, founder Changpeng “CZ” Zhao, and BAM Trading Services, which operates Binance.US. The complainants claimed the cryptocurrency platform enabled terrorist organizations to transfer money using digital assets.
The terrorist incidents occurred during an eight-year span from 2016 through 2024. Organizations implicated in the complaint included Hamas, Hezbollah, ISIS, al-Qaeda, and Palestinian Islamic Jihad.
US District Judge Jeannette A. Vargas from the Southern District of New York authored the decision. The comprehensive 62-page opinion detailed the court’s reasoning.
While acknowledging Binance likely had “general awareness” of terrorist financing activity on its platform, the ruling emphasized this wasn’t sufficient. The court referenced Binance’s track record of anti-money laundering compliance failures, its provision of services to Iranian users under sanctions, and internal company messages demonstrating executive knowledge of terrorist transactions.
Nevertheless, mere awareness fell short of the legal threshold. Plaintiffs needed to demonstrate “knowing and substantial assistance” directly connected to the specific terrorist acts that injured them. The complaint failed to satisfy this requirement.
Court Analysis of Hamas and Iran-Related Transactions
The complaint detailed approximately $56 million in transfers associated with Hamas and $59 million linked to Palestinian Islamic Jihad processed through Binance. The judge characterized this aspect as “a closer call.”
Binance had internally acknowledged awareness of Hamas activity on its platform dating back to 2019. Even so, the court determined the plaintiffs’ argument depended excessively on fungibility — the concept that because Binance processed widespread illicit transactions, some funds necessarily reached the attackers.
The decision followed the 2025 Second Circuit precedent Ashley v. Deutsche Bank, which established stricter requirements for terrorism financing claims against financial institutions.
Judge Vargas observed that another lawsuit, Raanan v. Binance, had withstood dismissal in February 2025 despite similar allegations. However, that case preceded the Ashley decision, which she stated now mandates a different legal analysis.
Company Response and Continuing Legal Challenges
Binance General Counsel Eleanor Hughes characterized the dismissal as “a complete vindication.” CZ stated on X that centralized platforms have “zero motive” to facilitate terrorist activity, arguing such users provide minimal trading revenue.
Zhao entered a guilty plea to federal charges involving anti-money laundering violations and sanctions evasion in November 2023, receiving a presidential pardon from President Trump afterward.
The court authorized plaintiffs to submit a revised complaint within 60 days. Judge Vargas indicated the deficiencies could be remedied by providing specific information about wallet ownership, transaction timing, and connections between account users and the attacks.
Two companion lawsuits remain pending: the Raanan case brought by October 7 survivors, and another suit filed in North Dakota during November 2025.
Meanwhile, Binance faces separate scrutiny from 11 US senators who allege the exchange processed more than $1 billion in transactions connected to Iranian entities.
