Federal Judge Tosses Terror Financing Case Against Binance and CZ Following Court Victory

TLDR

• Manhattan federal court threw out terrorism financing claims filed by 535 victims against Binance, CZ, and Binance.US
• Judge ruled plaintiffs didn’t establish direct connection between exchange operations and individual terror attacks
• Court found Binance likely had “general awareness” of illicit financing activity on its platform
• Plaintiffs given 60-day window to submit revised complaint with stronger evidence
• Binance labeled the decision “a complete vindication,” though two separate lawsuits continue

A Manhattan-based federal judge threw out all allegations in a significant Anti-Terrorism Act case against Binance this past Friday. The legal action involved 535 individuals who were either victims or family members of those affected by 64 separate terrorist incidents.

The defendants in the case included Binance, its co-founder Changpeng “CZ” Zhao, and BAM Trading Services, which operates Binance.US. Those filing suit claimed the cryptocurrency platform enabled terrorist organizations to transfer money using digital assets.

The terrorist incidents cited occurred from 2016 through 2024. Organizations mentioned in the legal filing included Hamas, Hezbollah, ISIS, al-Qaeda, and Palestinian Islamic Jihad.

Judge Jeannette A. Vargas from the US District Court for the Southern District of New York delivered the decision. Her written judgment spanned 62 pages.

The ruling acknowledged that Binance appeared “generally aware” that its platform facilitated terrorist financing. Evidence included Binance’s track record of anti-money laundering compliance failures, its provision of services to Iranian users under sanctions, and internal company messages demonstrating executives understood terrorists were using the platform.

Yet general awareness proved insufficient. The court determined that those bringing the lawsuit needed to demonstrate “knowing and substantial assistance” with clear connections to the particular attacks that resulted in their harm. The complaint fell short of this requirement.

What the Court Found on Hamas and Iran Transactions

The legal documents outlined approximately $56 million in transfers associated with Hamas and $59 million connected to Palestinian Islamic Jihad flowing through Binance. The court characterized this segment of the lawsuit as “a closer call.”

Binance had also acknowledged internally that it was aware of Hamas conducting transactions on its platform since at least 2019. Nonetheless, the court determined the plaintiffs’ argument depended excessively on fungibility — the concept that because Binance enabled widespread illicit transactions, some money must have reached those responsible for the attacks.

The judgment referenced a 2025 Second Circuit ruling in Ashley v. Deutsche Bank. That decision elevated legal standards for terrorism financing lawsuits against financial entities.

Judge Vargas observed that another case, Raanan v. Binance, had withstood dismissal motions in February 2025 despite similar accusations. However, that proceeding concluded before the Ashley decision, which she indicated now demands a different legal outcome.

Binance’s Response and Ongoing Scrutiny

Zhao entered a guilty plea to federal charges involving anti-money laundering violations and sanctions breaches in November 2023 and subsequently received a presidential pardon from President Trump.

The judge authorized plaintiffs to submit a revised complaint within 60 days. She indicated shortcomings might be addressed through more precise information regarding wallet ownership, transaction dates, and connections between account users and the attacks.

Two related legal proceedings remain ongoing: the Raanan case brought by October 7 survivors, and another lawsuit filed in North Dakota during November 2025.

Additionally, Binance continues to contest accusations from 11 US senators alleging the exchange handled more than $1 billion in transactions connected to Iranian entities.

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