Imagine waking up to the news that the world’s largest crypto exchange might have quietly helped finance one of the deadliest terrorist attacks in modern history. Sounds like a Hollywood thriller, right? Except it’s happening right now, in a federal courtroom in North Dakota.
Over 300 survivors and family members of those killed or wounded on October 7, 2023 have just filed a civil lawsuit that reads like a financial horror story. They’re going after Binance, its founder Changpeng Zhao (everyone still calls him CZ), and senior executive Guangying Chen for allegedly turning the platform into a freeway for terrorist money – more than a billion dollars’ worth, according to the complaint.
A Lawsuit That Changes Everything
I’ve been covering crypto since the Mt. Gox days, and I’ve never seen allegations this explosive land against a major exchange that’s already “settled” with U.S. authorities. This isn’t some fringe DeFi protocol nobody heard of – this is Binance, the 800-pound gorilla that still handles more volume than the next five exchanges combined.
The plaintiffs are using a rarely invoked but incredibly powerful law: the Justice Against Sponsors of Terrorism Act. It basically says if you knowingly provide material support to terrorists, you can be sued by the victims. And boy, do they claim Binance knew.
What the 284-Page Complaint Actually Says
The document is brutally detailed. We’re talking specific wallet addresses, transaction hashes, and dollar amounts broken down month by month. Some of the most chilling parts:
- More than $300 million allegedly sent to designated terrorist wallets before October 7
- Another $115 million after the attack – yes, even while the world was still reeling
- Direct transfers involving Hamas, Hezbollah, and Iran’s Islamic Revolutionary Guard Corps
- Some wallets apparently still active today
One example that made my stomach turn: a single Venezuelan woman with a livestock company in Brazil supposedly received $177 million in deposits and withdrew $130 million. Nothing about her profile justified those sums. The lawyers argue this is textbook money-laundering cover.
“When a company chooses profit over even the most basic counter-terrorism obligations, it must be held accountable – and it will be.”
– Lead attorney for the victims
This Isn’t Binance’s First Rodeo
Let’s not forget: barely a year ago, Binance paid a record-breaking $4.3 billion criminal penalty to the U.S. Department of Justice. CZ himself stepped down as CEO and served four months in prison. The charge? Running an unlicensed money-transmitting business and willfully violating the Bank Secrecy Act.
Part of that settlement explicitly admitted the platform had processed transactions involving terrorist groups – including Hamas. So the obvious question screaming from every page of this new lawsuit is: Did anything actually change?
The plaintiffs say no. They claim Binance kept the same offshore corporate maze, the same minimal record-keeping, the same “don’t ask, don’t tell” attitude toward suspicious accounts. In fact, they allege some of the terrorist-linked wallets kept trading happily long after the DOJ deal was signed.
How Do You Even Hide a Billion Dollars in Crypto?
People who are new to crypto often think everything is anonymous. It isn’t – it’s pseudonymous. Every transaction lives forever on a public blockchain. That’s actually what makes these allegations so damning.
Chain-analysis firms have gotten scarily good at following the money. Once a wallet is tagged as belonging to a sanctioned entity, every hop it makes can be tracked. The lawsuit claims Binance had all the data it needed to spot these flows but chose to look the other way because, well, fees are fees.
In my experience covering this space, exchanges usually catch 90 % of obvious bad stuff when regulators are breathing down their necks, then quietly let controls slide again once the heat dies down. If these allegations hold up, Binance may have taken that playbook to a whole new level.
The Pardon That Raised Eyebrows
Timing, as they say, is everything. Just weeks ago, President Trump issued a surprise pardon for CZ for his criminal conviction. The crypto community cheered – “regulatory clarity at last!” – but the victims’ families are furious.
Some commentators have openly speculated the pardon might be connected to Binance’s investments in Trump-family-linked crypto projects. Whether true or not, the optics are terrible when a newly pardoned billionaire immediately gets hit with a terror-financing lawsuit.
What Happens Next?
Binance’s legal team hasn’t directly addressed the specific transactions yet. Their public line remains the same: “We comply fully with internationally recognized sanctions, just like traditional banks.”
But here’s the reality check: traditional banks get fined hundreds of millions when they mess up sanctions compliance. They don’t get sued by terror victims for a billion dollars. The stakes here are existential.
This case joins three other active federal lawsuits making nearly identical claims in New York, Alabama, and Washington DC. If even one of them survives dismissal, discovery is going to be brutal – emails, Slack messages, internal risk reports, the works.
The Bigger Picture for Crypto
Look, I’m as pro-crypto as anyone. I believe decentralized money can change the world for the better. But stories like this are the reason your aunt still thinks Bitcoin is only for criminals.
Every time a major platform gets exposed allegedly helping the worst actors on earth, it sets the entire industry back years. Politicians draft harsher laws. Banks refuse to touch crypto companies. Retail investors get scared off.
The uncomfortable truth? Robust KYC and transaction monitoring aren’t anti-crypto – they’re the only way we get to keep crypto. Because if exchanges won’t police themselves, someone else will do it for them, and they won’t be gentle.
I’ve watched this movie before. Remember Liberty Reserve? The digital currency that proudly advertised “100 % anonymous” until the founder got 20 years in prison and the platform was shut down forever. We don’t need another cautionary tale.
Final Thoughts
Right now, the crypto market is busy pumping to all-time highs, and most traders are too busy watching price charts to care about a lawsuit filed in North Dakota. That’s understandable – money is being made.
But if these allegations are even partially true, we’re looking at one of the darkest chapters in cryptocurrency history. A platform that supposedly learned its lesson after a $4 billion fine and a CEO in prison… allegedly kept the terrorist spigot open anyway.
The courts will decide the facts. But the crypto industry needs to decide something bigger: are we serious about building a financial system that can’t be weaponized by monsters, or are we just here for the lambos?
Because if it’s the latter, we might not have this industry for much longer.
Stay safe out there.
