Binance and founder CZ face a $1B lawsuit in U.S. They are accused of enabling illicit transfers tied to designated terror groups.
Changpeng Zhao, co-founder of Binance, returns to public scrutiny. A sweeping U.S. lawsuit alleges the exchange enabled illicit transfers. This was for several designated terror groups. According to the plaintiffs, the platform processed more than $1 billion in related transactions. This includes money that is earmarked for the October 7, 2023 Hamas attack.
New Lawsuit Alleges Extensive Terror Financing Links
The legal filing, which was made in a North Dakota federal court, involves 306 plaintiffs. These have links to victims of the October 7 attack. They include families of people who were killed, injured or taken hostage. The complaint contends that Binance enabled these transfers. This was despite its guilty-plea in 2023. It also ignores a $4.32 billion fine. This was for violating anti-money laundering laws and sanctions laws.
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Moreover, the suit claims that Binance enabled transfers associated with different terror groups. These include Hamas, Hezbollah, the Palestinian Islamic Jihad and Iran’s Revolutionary Guards. It alleges the platform processed more than $1 billion for these groups. Over $50 million came in after the October 7 incident. The filing says the exchange knowingly placed itself as a haven for illicit transactions.
In addition, Zhao had earlier pleaded guilty to related violations. He was sentenced for four months. This was before receiving a presidential pardon in October 2025. According to the complaint, Binance has failed to make significant changes to the structure of its operations. This is despite regulatory expectations after it plea deal.
Furthermore, Binance refused to deal with the lawsuit directly. The company claimed that it is subject to international laws regarding sanctions. A lawyer representing Zhao in the related matters also declined public comment. The plaintiffs ask for compensatory and triple damages. They claim significant damage from the activities he or she is accused of.
Plaintiffs Press for Accountability After New Allegations Surface
The complaint calls out for suspicious cryptocurrency flow. These were passed through accounts. These people had very little financial background. This was a cause for concern for investigators. Attorneys for the plaintiffs say the company failed to follow crucial safeguards. This was being done for commercial gain. They say that Binance knowingly evaded basic counterterrorism obligations.
Moreover, attorney Lee Wolosky said that the companies that are more concerned about profit than compliance must suffer. White House press secretary Karoline Leavitt added that Zhao’s prosecution took place under the tougher crypto stance of the previous administration. She said the same stance is at an end. Zhao said he was not expecting the legal developments. However, he went along with the process.
In addition, President Trump commented on the pardon. He stated that he didn’t know Zhao personally. However, he took action after getting input from advisers. These advisers felt that the case was a reflection of political pressure. The filing also refers to two suspicious transactions. These were passed through online addresses in Kindred, North Dakota. This is a small town with about 1000 people.
Legal Pressure on Binance Raises Sector-Wide Liquidation Fears
Families of victims have now broadened their claims. These are Binance executive Guangying Chen. They demand over $1 billion in damages. This is for what is alleged to be terror financing. The suit refers to a forensic review. This connects Binance accounts with regions such as Venezuela and Gaza. It says it was active even after the 2023 plea deal.
Furthermore, the lawsuit examines the previous violations by the exchange again. Binance has admitted to money laundering failures in 2023. This led to Zhao’s resignation of the CEO position. The complaint claims the company’s compliance reforms are still not enough. Binance reiterated that the proceedings that are ongoing prevent it from commenting in detail. However, it said it supports full adherence to sanctions frameworks. It also hopes for stability in the region.
The case may have implications for future asset security practices. This is the case for the whole sector. On-going legal pressure exist of possible liquidation risks. These could have wider impacts on crypto markets.