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A lawsuit against Binance proves the extent to which cryptocurrency platforms can be held responsible for harm in the real world. Filed by the families of the victims of the October 2023 attacks against Israel, it comes amid continued backlash to the recent presidential pardon of founder Changping Zhao (CZ).
The process is more than a new legal headache, as it is seen as a potential shift from regulatory fines to significant private liability associated with terrorist financing.
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Terrorist financing claims will hurt Binance
The problem that Submitted by over 70 families In a US federal court last week, Binance is accused of being known to enable transactions for Hamas, Hezbollah, Iran’s Islamic Revolutionary Guard Corps, and other US-designated terrorist groups.
The plaintiffs, mostly relatives of those killed or injured in the October 7 attacks, argue that Binance was more than just a freeloader. They say the platform has structurally enabled large-scale terrorist financing.
read Complaint “Over the years, the defendants knowingly, intentionally, and systematically assisted Hamas … and other terrorist groups in transferring and hiding the equivalent of hundreds of millions of US dollars through the Binance platform to support their terrorist activities. This assistance directly and materially contributed to the attacks of October 7 and subsequent terrorist attacks.”
Previous government investigations have focused on Binance’s anti-money laundering failures. However, this lawsuit redirects the narrative, appealing to… CZ platform management It has systematically contributed to violence in the real world.
The lawsuit also comes at a crucial time for the company.
last month, US President Donald Trump pardoned the founder of Binance CZ After Binance got involved Multibillion dollar deal Linked to a cryptocurrency project belonging to the Trump family.
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Remove the movement CZ’s criminal cases He is allowed to take a more direct role in the company.
The case also comes two years after Binance’s 2023 settlement with US authorities, which included… A fine of $4.3 billion. The company admitted to violating the Bank Secrecy Act and US sanctions laws. CZ pleaded guilty, He left as CEOHe served a four-month prison sentence.
CZ’s pardon noted that while it appeared that Binance was safe, the trial showed that neither he nor the company was immune from civil liability.
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Despite criminal leniency, civil lawsuits are on the rise
The cause of the families is based on facts that have already been proven by the criminal authorities of the United States, which provides the plaintiff with a strong legal basis.
for what Binance has already admitted to widespread violations of the Bank Secrecy Act and US sanctions laws, the burden of proof is much lower. The families argue that Binance planted these flaws in its core operations, not in isolated compliance failures.
Instead of relying on broad accusations, the complaint is accused Specific portfoliosmoney laundering intermediaries, and transaction flows associated with designated terrorist groups.
In its structure, the case closely mirrors the way federal prosecutors assemble complex crime documents. The difference is that this same framework of evidence is now used by private prosecutors​​​​under US anti-terrorism law.
The laws allow victims of terrorism to seek civil damages against entities accused of providing material support, even indirectly. This legal path turns Binance’s past regulatory violations into the basis for a potentially massive civil liability case.
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The application of cryptocurrencies has for years followed a cycle: regulators investigated, companies paid fines, executives left, and markets moved. Related Civil Litigation The direct financing of terrorism Break this rhythm.
Unlike regulatory settlements, which limit financial exposure and close legal chapters, terrorism-related civil cases can involve compound damages and years of ongoing risk.
New enforcement class?
For the cryptocurrency industry, the ramifications extend far beyond a single exchange or court. If the case survives early dismissal and proceeds to discovery, it may Lead to a new exam How centralized platforms monitor, report and freeze high-risk activity.
More importantly, a win for the families could show that private actors — not just regulators — now pose one of the most serious financial threats to cryptocurrency companies.
In this scenario, compliance failures will not only result in fines. They will become long-term responsibilities that will follow the platforms for years to come.
