▲ Changpeng Zhao / ChatGPT-generated image

A lawsuit filed against Binance, the world’s largest cryptocurrency exchange, and its founder on allegations of financing terrorist organizations has been dismissed by a U.S. court, easing judicial uncertainty.

On March 7 (local time), former Binance CEO Changpeng Zhao (CZ) emphasized through crypto-focused media outlet Cointelegraph and his X (formerly Twitter) account that centralized exchanges have absolutely no incentive to assist terrorists. The U.S. District Court for the Southern District of New York ultimately dismissed the lawsuit filed against Binance, Zhao, and BAM Trading Services, the operator of Binance.US, which alleged that they facilitated the movement of terrorist funds through cryptocurrency transactions. Zhao underscored that from an economic standpoint, laundering terrorist funds is illogical and detrimental to exchanges rather than profitable.

The lawsuit had been filed on behalf of 535 victims and their families related to 64 terrorist attacks that occurred between 2016 and 2024. Plaintiffs claimed that major terrorist organizations—including Hezbollah, Hamas, ISIS, al-Qaeda, and the Palestinian Islamic Jihad—received financial support through cryptocurrency transactions conducted on the Binance platform. Citing U.S. anti-terrorism laws and the Justice Against Sponsors of Terrorism Act, they sought substantial damages, alleging that Binance aided and abetted terrorist activities.

Judge Jeannette A. Vargas, who presided over the case, ruled that the plaintiffs failed to demonstrate a sufficient connection between Binance’s operations and the specific terrorist attacks in question. Although allegations were raised regarding compliance failures or illicit activities on the Binance platform, Judge Vargas noted that the plaintiffs did not plausibly explain how those actions were directly linked to the terrorist attacks that caused their injuries. The court granted the plaintiffs 60 days to amend their complaint to address the deficiencies, effectively concluding the case at the pleading stage.

Zhao refuted the notion that centralized exchanges would have any reason to be associated with terrorist organizations from an economic perspective. “There is literally zero incentive for a centralized exchange to associate with terrorists,” he stated, explaining that such groups do not generate meaningful fee revenue and tend to withdraw funds immediately after depositing them, creating operational risks. He argued that such fund movements would damage an exchange’s reputation and invite intense regulatory scrutiny, making any support for terrorism commercially irrational.

In addition to its recent court victory, Binance has also strongly denied allegations of violating Iran-related sanctions and has taken legal action in response. The company sent an official letter rejecting claims made by 11 U.S. senators that it facilitated Iran-related transactions, calling the accusations clearly false and unfounded. As the cryptocurrency market—led by Bitcoin (BTC)—continues to evolve, Binance stated that it is strengthening its compliance systems, and the recent ruling sets an important precedent in clarifying the scope of legal liability for cryptocurrency exchanges.

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