Binance Holdings Ltd, along with its founder and former CEO Changpeng Zhao and senior executive Guangying Chen, has been named in a federal lawsuit for knowingly allowing transactions that enabled Hamas to support and carry out the Oct. 7 attack on Israel.
Summary
- Over 300 victims and families have sued Binance and Zhao under the Justice Against Sponsors of Terrorism Act.
- Plaintiffs claim Binance enabled over $1B in transactions tied to Hamas and other designated groups.
- Binance and Zhao are currently battling three other federal lawsuits.
Over 300 victims and family members of those killed or injured in the attack, led by attorney Lee Wolosky, have filed a civil suit against Zhao and his colleagues under the Justice Against Sponsors of Terrorism Act.
The plaintiffs claim Binance “knowingly facilitated” the movement of more than $1 billion in transactions linked to sanctioned terrorist groups like Hamas, Hezbollah, and the Islamic Revolutionary Guard Corps.
“When a company chooses profit over even the most basic counter-terrorism obligations, it must be held accountable — and it will be,” Lee Wolosky, an attorney for the victims, told Bloomberg.
Hamas’s attack on southern Israel during the early morning hours of Oct. 7, 2023, resulted in the devastating loss of life, with at least 1,200 people killed and hundreds more injured or taken hostage.
Now the plaintiffs allege that Binance “intentionally structured itself as a refuge for illicit activity, and knew full well that specific accounts controlled by terroristic organizations were among its customers.” They claim these funds could be used to “commit terrorist attacks.”
Binance and Zhao have previously been investigated and prosecuted in the United States for failing to implement adequate anti-money laundering controls, which enabled transactions tied to terrorist groups like Hamas and al-Qaeda. As a result, the company had to pay a $4.3 billion criminal penalty, while Zhao had to step down as chief executive as part of the settlement and serve a four-month prison sentence.
However, the latest 284-page complaint in North Dakota, which adds to three other lawsuits that both Zhao and Binance are currently battling across the country over the exchange’s alleged role in terror financing, claims to reveal far more alleged transactions with sanctioned groups, some of which were executed even after the settlement with the Department of Justice.
Binance “sent the equivalent of more than $300 million to designated wallets on the blockchain before the attacks and more than $115 million after,” an excerpt from the complaint reads.
Plaintiffs have further alleged that Binance failed to maintain adequate controls between 2017 and 2023, which allowed sanctioned entities to move large sums without detection. Furthermore, they claim Binance operated through a web of offshore entities with little oversight and minimal recordkeeping.
For instance, the complaint highlights a Venezuelan woman having received hundreds of millions of dollars even when there were no obvious financial means to explain the transfers. She reportedly operated a livestock-related company in Brazil. She opened a Binance account in 2022 and went on to receive over $177 million in deposits and withdraw more than $130 million.
“Binance ensured that terrorists and other criminals could deposit and shuffle enormous sums on the exchange with impunity. To this day, there is no indication that Binance has meaningfully altered its core business model,” the suit alleges, adding that some of the identified wallets are still active.
Legal pressures mount on Zhao and Binance
While the other lawsuits Binance is facing in New York, Alabama, and Washington DC have focused on similar claims, the latest one has emerged as the most detailed case to date, with specific wallet addresses and transaction records cited throughout.
Lawyers representing Binance have not denied or admitted any of the allegations so far and have reiterated that the exchange complies fully with “internationally recognised sanctions laws, consistent with other financial institutions.”
Zhao, who was recently pardoned for his criminal conviction by President Trump, has yet to issue a public statement on the matter. Zhao’s surprise pardon has also become a center of controversy lately, with some alleging it may have been influenced by financial ties between Binance and a crypto venture associated with the Trump family.