Binance faces a $1 billion federal lawsuit from 306 victims and families of the Oct. 7, 2023 Hamas attack, weeks after President Donald Trump pardoned the platform's founder. The civil action alleges the world's largest cryptocurrency exchange by trading volume enabled terrorist financing through lax compliance and off-chain transfers. The lawsuit arrives as Changpeng Zhao, known as CZ, walks free from criminal liability following the presidential pardon that voided his four-month prison sentence.
What Happened: Terror Financing Claims
The civil action filed in federal court in North Dakota names Binance, CZ, and executive Gunagying "Heina" Chen as defendants. Plaintiffs include victims who were murdered, wounded, or taken hostage during the attack. Their legal team claims Binance operated as a money laundering vehicle for Hamas, Hezbollah, Palestinian Islamic Jihad, and Iran's Islamic Revolutionary Guard Corps.
The complaint alleges Binance permitted these groups to transfer funds through off-chain networks with minimal compliance oversight, using accounts in Venezuela and Brazil.
Court documents cite specific cases, including accounts belonging to Ali Mohammad Alawieh, son of a Hezbollah commander, and a 25-year-old Palestinian Islamic Jihad operative.
Internal compliance messages allegedly show company officials knew they were handling unlawful funds. The North Dakota venue was selected because Binance transactions originated from IP addresses linked to Hamas-related operatives in the United States.
Trump pardoned CZ in 2025 after his 2023 guilty plea to failing to maintain an anti-money laundering program. The pardon voided his criminal conviction and eliminated the four-month sentence scheduled to begin April 30, 2024. A U.S. Senate resolution (S. RES. 466) issued Oct. 23, 2025 formally condemns the pardon, highlighting what lawmakers described as serious violations of financial crime laws.
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Why It Matters: Precedent Questions
The case could establish whether cryptocurrency exchanges bear legal responsibility for terrorist financing conducted through their platforms. Legal experts involved in the lawsuit argue the exchange enabled acts of terrorism, including murder and hostage-taking, through systematic compliance failures. Plaintiffs seek compensatory and treble damages.
Ray Youssef, CEO of NoOnes, alleged Binance seized funds from Gazans and handed them to Israel's military with customer identification data.
"A young man reached out to me. He lost his life savings. They lost $40 billion. It wasn't just Palestinians. It was anyone with an Arabic or Muslim name," Youssef told BeInCrypto.
He leads a boycott campaign against the exchange based on these claims.
Binance disputes the allegations, stating it complies with international sanctions laws.
The company cited U.S. Treasury statements indicating cryptocurrency is not widely used by Hamas.
Co-founder Yi He framed criticism as institutional pushback against the crypto sector. The lawsuit has drawn extensive coverage in Jewish and international media, with observers watching whether civil liability survives where criminal prosecution ended in a presidential pardon.
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