Binance Hit By Explosive Lawsuit: What You Need to Know

Changpeng Zhao may have been pardoned by Donald Trump, but the crime that saw him spend four months behind bars continues to cause legal headaches.

Binance is now facing a lawsuit from hundreds of people who were affected by the October 7 attack, when Hamas killed 1,200 people in Israel and took 250 hostages.

The document, filed at a court in North Dakota, pulls no punches from the offset. It begins by claiming that the major crypto exchange and CZ “knowingly, willfully and systematically assisted” Hamas and other terrorist groups for many years.

It is alleged that Binance enabled these groups “to transfer and conceal the equivalent of hundreds of millions of U.S. dollars” — sidestepping sanctions and directly contributing to the tragic events that unfolded back in 2023.

Lawyers say that, in the run-up to October 7, Hamas had engaged in a “meticulous multi-year effort that involved amassing an extensive and well-financed arsenal of weapons and constructing hundreds of miles of subterranean attack tunnels.”

The court filing dismisses any suggestion that Binance’s involvement was accidental. Instead, it alleges that the trading platform “purposely attracted criminals including terrorist organizations” — all with the goal of maximizing volumes and generating transaction fees.

It quotes Changpeng Zhao as claiming that Binance’s headquarters fluctuated based on where he was at any given moment — and alleges this was a dog whistle for malicious actors looking to launder ill-gotten gains.

“Binance pitched itself to terrorist organizations, narcotics traffickers and tax evaders as beyond the reach of any single country’s laws or regulations.”

According to the lawsuit, this was a company that became a “go-to platform for criminals to move assets while evading law enforcement, in large part because it was designed to launder money.”

Some of the messages from Binance executives included in the court filing are downright embarrassing to say the least. It quotes former chief compliance officer Samuel Lin as saying its users “are here for crime” — with a member of his team jokingly suggesting that the exchange should advertise with a banner that said: “Is washing drug money too hard these days? Come to Binance we got cake for you.”

Meanwhile, other allegations are downright awkward. The lawsuit points to how a video on Hamas’s official website back in 2019 actually instructed viewers to create an account on Binance to contribute crypto.

“Years before October 7, Binance knew that Hamas … and other terrorist organizations were all transacting regularly on its platform and nevertheless actively assisted their use of the platform. It did so at a time when Hamas, in particular, was publicly directing its donors to send funds to so-called ‘crypto wallets’ held with Binance.”

The court filing claims that independent compliant services had even warned Binance that certain wallets had links to Hamas — but the exchange “affirmatively acted to protect those customers” instead of reporting them or freezing funds.

“In other words, 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.”

Worryingly, lawyers allege this practice “continues to this day.”

You may remember that in late 2023 — weeks after the October 7 attacks happened — Binance had entered into a $4.3 billion settlement with the U.S. Department of Justice after failing to prevent money laundering.

But according to this lawsuit, “Binance’s conduct was far more serious and pervasive” than the American investigation had suggested.

“Binance knowingly sent and received the equivalent of more than $1 billion to and from accounts and wallets controlled by the foreign terrorist organizations responsible for the October 7 attacks.”

Later in the court filing, attorneys cite blockchain analytics that suggest more transactions worth more than $50 million have taken place since then, too.

While Changpeng Zhao is no longer Binance CEO, the lawsuit argues that he “continues to wield significant influence over its business decisions” — directly tying him to the many allegations it sets out.

“Binance went further than merely looking the other way. Binance under Zhao’s direction destroyed or withheld documentation of its illicit activities. It avoided keeping formal records of certain meetings and communications.”

A trial is now being demanded — with the plaintiffs seeking compensatory damages and legal costs.

Binance is yet to respond.