Binance's CZ claims centralized exchanges lack any incentive to support terrorists following dismissal of terrorism lawsuit
Binance, its former CEO Changpeng Zhao, and Binance.US were cleared by a federal judge in the United States who threw out allegations of facilitating cryptocurrency transfers for terrorist organizations.
Changpeng "CZ" Zhao, the former chief executive of Binance, declared that centralized cryptocurrency exchanges possess "zero motive" to provide assistance to terrorist organizations following the dismissal by a United States court of a legal case that accused the platform of enabling terrorist financing operations.
Through a statement shared on X, Zhao presented an economic argument explaining why such activities would be irrational for cryptocurrency exchanges. "There are absolutely zero (0) motive for any CEX to have anything to do with terrorists," Zhao stated, further explaining that these bad actors are not likely to produce trading revenue and would probably only deposit funds temporarily before making withdrawals.
These remarks came after the US District Court for the Southern District of New York issued a ruling dismissing allegations filed by hundreds of individuals who were victims or family members of those affected by terrorist attacks. The legal action claimed that Binance, Zhao himself, and BAM Trading Services, which operates Binance.US, provided assistance to terrorist organizations in moving funds via cryptocurrency-based transactions.
The court filing revealed that the individuals bringing the lawsuit represented 535 people connected to those who suffered from 64 separate attacks that occurred between 2016 and 2024. These violent incidents were attributed to militant organizations such as Hezbollah, Hamas, ISIS, al-Qaeda and Palestinian Islamic Jihad.
Victims seek damages from Binance
The individuals filing the lawsuit maintained that those who carried out the attacks or organizations affiliated with them derived benefits from financial transactions that took place on the Binance trading platform. They pursued compensation under both the US Anti-Terrorism Act and the Justice Against Sponsors of Terrorism Act, legislation that permits victims to file claims against organizations accused of providing support to terrorist activities.
Judge Jeannette A. Vargas dismissed the legal action after determining that the complaint did not successfully demonstrate an adequate connection between the operational activities of Binance and the terrorist attacks in question. Although the filing outlined purported compliance shortcomings and illicit transactions occurring on the platform, the court determined that the plaintiffs failed to plausibly demonstrate how the exchange's actions were connected to the particular attacks that resulted in their harm.
The ruling brought the case to an end during the pleading phase. The judge additionally stated that "any amended complaint shall be due within 60 days."
Binance denies Iran transaction claims
This recent legal victory for Binance arrives during a period when the cryptocurrency exchange faces increased examination regarding financial transactions connected to sanctioned organizations. On Friday, the platform responded forcefully to accusations made by a coalition of 11 US senators, denying assertions that it enabled transactions associated with Iranian entities.
Through a letter delivered Friday to Senators Richard Blumenthal and Ron Johnson, Binance stated that the February investigation was based on reports that were "demonstrably false" and did not contain credible supporting evidence. The regulatory attention followed media coverage alleging the platform had processed in excess of $1 billion in cryptocurrency transactions associated with Iranian entities Hexa Whale and Blessed Trust and had terminated employees who voiced internal concerns about these matters.