By Jonathan Stempel
NEW YORK, March 6 (Reuters) – A federal judge on Friday dismissed a civil lawsuit seeking to hold Binance, the world’s largest cryptocurrency exchange, and founder Changpeng Zhao liable for transactions that allegedly helped terrorist groups conduct 64 attacks around the world.
U.S. District Judge Jeannette Vargas in Manhattan said the 535 plaintiffs, including victims and relatives of victims, did not plausibly allege that the defendants “culpably associated themselves with these terrorist attacks, participated in them as something they wanted to bring about, or sought by their actions to ensure their success.”
The plaintiffs said the attacks occurred between 2017 and 2024, and attributed them to what they called foreign terrorist groups (“FTOs”) including Hamas, Hezbollah, Iran’s Revolutionary Guard, Islamic State, Kataib Hezbollah, Palestinian Islamic Jihad and al Qaeda.
They sought to hold Binance and Zhao liable for the alleged transfer of hundreds of millions of dollars of cryptocurrency to and from the FTOs, and billions of dollars of alleged transactions with Iranian users that benefitted proxies who conducted the attacks.
Vargas said that while Binance and Zhao may have been generally aware of the exchange’s role in terrorist financing, their only relationship to the FTOs was that “they, or their affiliates, had accounts on, and have transacted on, the Binance exchange in an arms’ length relationship.”
The judge also called the length of the plaintiffs’ 891-page, 3,189-paragraph complaint “wholly unnecessary” despite the “weighty” allegations. She said the plaintiffs may amend their complaint.
Lawyers for the plaintiffs did not immediately respond to requests for comment.
In court papers, Binance and Zhao said they condemned terrorism.
Zhao also accused the plaintiffs of trying to “piggyback” on Binance’s November 2023 guilty plea and $4.32 billion criminal penalty for violating federal anti-money-laundering and sanctions laws, to justify triple damages under the federal Anti-Terrorism Act.
“Binance was pleased to see that the court in this case correctly dismissed these baseless allegations,” a spokesperson for the exchange said in an email. “Binance takes compliance seriously and has no tolerance for bad actors on its platform.”
Zhao’s lawyers had no immediate comment.
(Reporting by Jonathan Stempel in New York; Editing by Franklin Paul)
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