Binance, the largest cryptocurrency exchange in the world by a large margin, is having a public and profitable crash landing with their U.S. The lawsuit accuses the platform of facilitating the transfer of millions of dollars to organizations designated as terrorists by the U.S. government. Survivors of the October 7, 2023 attacks in Israel, and family members of those killed, initiated this lawsuit. They allege that Binance intentionally was a conduit for the transactions associated with these events.
The lawsuit’s specific targeting of crypto unicorn Binance and its founders—including CEO Changpeng Zhao—marks a notable escalation. Just a few months later in November 2023, Binance agreed to plead guilty to money laundering and sanctions violation charges. To resolve these concerns, the company promised to pay more than $4 billion in penalties. Notwithstanding that settlement, the present lawsuit alleges that Binance went right back to running its business—making money—without changes to its business model.
The complaint alleges that Binance enabled the evasion of more than $1 billion in sanctions. This money is directly tied to accounts owned by U.S.-designated foreign terrorist organizations. As the lawsuit points out, Binance moved over $50 million in suspicious transactions after the October 7th attacks. At least two of those transfers originated in the United States.
“By deliberately failing to monitor inbound funds, Binance ensured that terrorists and other criminals could deposit and shuffle enormous sums on the exchange with impunity,”
The lawsuit goes into detail about Changpeng Zhao’s past legal problems. In early 2023, he pleaded guilty to conspiracy to commit money laundering charges. He was subsequently pardoned by then-President Donald Trump. In a public statement, Trump would assert he had “no idea” who Zhao was while his sons were deep within the cryptocurrency space. Even time-traveling into the future, many of the same Democratic leaders denounce this pardon. They are concerned that it would prompt more illegal acts to take place within the crypto ecosystem.
Despite the allegations and ongoing lawsuit, Binance continues to claim that it is focused on increasing regulatory compliance. The company stated,
“We remain steadfast in our commitment to working with regulators, law enforcement, and our users to protect the integrity of the global digital-asset ecosystem,”
Yet the lawsuit does unearth a surprising truth. There is no indication from Binance that it has changed its business practices in any material way since being caught breaking the law last time.