Lawsuit Says Binance Routed $1B to Hamas, Hezbollah and IRGC; CZ’s Trump Pardon Doesn’t Block Civil Claim
A federal civil lawsuit filed in North Dakota by 306 victims of the Oct. 7, 2023 Hamas attacks accuses Binance and former CEO Changpeng Zhao of facilitating over $1 billion in transfers tied to Hamas, Hezbollah, Palestinian Islamic Jihad (PIJ) and Iran’s Islamic Revolutionary Guard Corps (IRGC). Plaintiffs say Binance processed $50–100 million after the Oct. 7 attacks and used off-chain internal transfers and intermediary accounts in countries such as Venezuela and Brazil to obscure flows. The 300-page complaint names accounts allegedly linked to a senior Hezbollah commander’s son, Hamas-associated money exchangers in Gaza, and a PIJ member, and describes laundering networks involving gold-smuggling and crypto movement across multiple jurisdictions. Lawyers argue Binance’s behavior reflects a systemic “business model” rather than isolated compliance lapses. The suit follows Binance’s 2023 DOJ settlement — which imposed fines and monitoring — and former CEO CZ’s recent pardon by Donald Trump; the pardon removes federal criminal exposure for CZ but does not block civil suits or potential treble damages under U.S. anti‑terrorism statutes. Binance denies wrongdoing, citing sanctions compliance and a small share of global terror financing. For crypto traders: expect heightened regulatory scrutiny on major exchanges, rising compliance costs, potential risk premia on exchange-related tokens, and possible short-term volatility in market sentiment if courts expand civil liability for on‑ramps and intermediaries.
Bearish
This lawsuit increases legal and regulatory risk for Binance and, by extension, for major centralized exchanges. Short-term impact: heightened uncertainty can trigger risk-off sentiment among traders, withdrawal flows from exchanges perceived as higher-risk, and price volatility for exchange-linked tokens and broader crypto markets. Market makers may widen spreads and counterparties can raise exchange risk premiums. Medium-to-long-term impact: if courts find civil liability or impose large damages, centralized exchanges could face higher compliance costs, stricter KYC/AML controls, and reduced liquidity — all bearish factors for crypto risk assets. Competitors with stronger compliance may gain market share, but overall capital formation and on‑ramp convenience could be constrained, weighing on demand. The CZ pardon reduces criminal exposure for him personally but does not mitigate civil damages or reputational fallout, so the legal cloud over Binance persists and sustains downside pressure on market sentiment.