The lawsuit against Binance is testing the extent to which crypto platforms can be held responsible for real-world damages. The document, filed by the families of victims of the October 2023 attack on Israel, comes amid continued backlash over founder Zhao Changpeng’s (CZ) recent presidential pardon.
The case is being watched less as a new legal issue and more as a potential blueprint for a shift from regulatory fines to high-stakes personal liability related to terrorist financing.
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Terrorist financing allegations hit Binance
The lawsuit, filed last week in U.S. federal court by more than 70 families, accuses Binance of intentionally enabling transactions with Hamas, Hezbollah, Iran’s Islamic Revolutionary Guard Corps, and other U.S.-designated terrorist organizations.
The plaintiffs, most of whom are relatives of those killed and injured in the October 7 attack, argue that Binance was not just exploited. They claim that the platform structurally enabled large-scale terrorist financing.
“Over a period of years, the defendants knowingly, knowingly, and systematically assisted Hamas and other terrorist organizations in transferring and concealing hundreds of millions of dollars worth of dollars through the Binance platform in support of their terrorist activities. This support directly and materially contributed to the October 7 attacks and subsequent terrorist attacks,” the complaint states.
Previous government investigations focused on Binance’s anti-money laundering failures. But this lawsuit reframes the narrative, alleging that CZ’s platform management systematically contributes to real-world violence.
This lawsuit also marks a critical juncture for the company.
Last month, US President Donald Trump pardoned Binance founder CZ after Binance participated in a multibillion-dollar transaction involving a cryptocurrency venture with ties to the Trump family.
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The move clears CZ of his criminal record and could allow him to take a more direct role at the company.
The lawsuit also comes two years after Binance’s 2023 settlement with US authorities, which included a $4.3 billion fine. The company admitted to violating bank secrecy laws and U.S. sanctions laws. Mr. CZ pleaded guilty, resigned as CEO, and served a four-month prison sentence.
Although CZ’s pardon suggests Binance is innocent, the lawsuit shows that neither he nor the company is immune from civil liability.
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Despite criminal leniency, civil claims intensify
The families’ lawsuit is based on facts already proven by U.S. criminal enforcement, giving the plaintiffs a strong legal basis.
Binance has already admitted widespread violations of bank secrecy laws and US sanctions laws, which greatly reduces the burden of proof. The families claim that Binance embedded these flaws into its core operations rather than individual compliance violations.
Rather than relying on broad charges, the complaint reportedly cites specific wallets, laundering intermediaries, and transaction flows associated with designated terrorist organizations.
The structure of this case closely mirrors the way federal prosecutors put together complex criminal charges. The difference is that this same evidentiary framework is currently being deployed by private plaintiffs under U.S. anti-terrorism laws.
These laws allow victims of terrorism to claim civil damages against entities accused of providing material support, even indirectly. This legal tool makes Binance’s past regulatory violations the basis of a potentially large-scale civil liability lawsuit.
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For years, cryptocurrency enforcement has gone through a cycle of regulators investigating, companies paying fines, executives exiting, and the market moving forward. Civil lawsuits directly linked to terrorist financing disrupt that rhythm.
Unlike regulatory settlements, which limit financial risk and end legal proceedings, terrorism-related civil litigation can multiply damages and involve ongoing risks for years.
New executive class?
For the cryptocurrency industry, the impact goes far beyond one exchange or one courtroom. If the case is dismissed early but proceeds to discovery, it could bring new scrutiny to how centralized platforms monitor, flag and freeze high-risk activity.
More importantly, the family’s victory could prove that private plaintiffs, not just regulators, pose one of the most serious economic threats to crypto businesses.
In that scenario, non-compliance will no longer result in fines alone. These will be long-tail debt that will follow the platform for years to come.
