Binance terrorism lawsuit dismissed, but judge signals plaintiffs could refile with sharper allegations
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A federal judge in Manhattan on Friday dismissed a sweeping Anti-Terrorism Act lawsuit against Binance, founder Changpeng Zhao, and Binance.US operator BAM Trading, finding that 535 plaintiffs failed to plausibly allege that the exchange's conduct aided specific terrorist attacks, according to a 62-page opinion from the U.S. District Court for the Southern District of New York.

Judge Jeannette A. Vargas ruled that plaintiffs adequately alleged Binance was "generally aware" of its role in terrorist financing, citing the exchange's well-documented history of flouting AML/CFT rules, serving sanctioned Iranian users, and knowingly hosting wallets tied to designated terrorist organizations. But the court held that awareness alone was insufficient under the Justice Against Sponsors of Terrorism Act, which requires plaintiffs to show "knowing and substantial assistance" with a nexus to the attacks themselves.

The plaintiffs, victims and relatives of victims of attacks perpetrated between 2016 and 2024 by groups including Hamas, Hezbollah, the IRGC, al-Qaeda, PIJ, and ISIS, had argued that Binance's deliberate violations of sanctions law and anti-money laundering requirements effectively funneled hundreds of millions of dollars to terrorist organizations. The amended complaint detailed billions in Iranian transactions processed through Binance, the exchange's hosting of sanctioned nested exchange Garantex, and internal communications showing executives were aware that terrorists transacted on the platform.

The court acknowledged this misconduct at length but concluded the allegations did not connect Binance's actions to the specific attacks. With respect to Hamas and PIJ, which the court called "a closer call," the opinion noted approximately $56 million in Hamas-linked and $59 million in PIJ-linked transfers through Binance, and the exchange's own admission that it knew Hamas was transacting on the platform as early as 2019. But the court found the plaintiffs' theory still depended on fungibility, meaning the logic that because Binance facilitated illicit transactions broadly, some of those funds must have supported the attacks.

Critically, the ruling applied the Second Circuit's 2025 decision in Ashley v. Deutsche Bank, which held that a bank's general facilitation of money laundering for clients with terrorist ties was too attenuated to support JASTA liability. Judge Vargas explicitly noted that a separate Binance terrorism case, Raanan v. Binance, had survived a motion to dismiss in February 2025 on similar Hamas and PIJ allegations, but noted that Raanan was decided before the Second Circuit's Ashley ruling, which she concluded requires dismissal on the facts here.

Vargas also dismissed three conspiracy counts and a primary liability claim brought by the family of an infant who died after a Wizard Spider ransomware attack disrupted hospital systems. The court declined to reach personal jurisdiction questions regarding Zhao and BAM, having dismissed all claims on the merits.

The judge did not mince words about the 891-page complaint, calling its length "wholly unnecessary" and noting that a 30-page section on the evolution of Iranian politics from the 1970s onward "added little to the Plaintiffs' claims." But she granted the plaintiffs 60 days to file an amended complaint, signaling that the deficiencies could potentially be cured with more specific allegations about wallet ownership, transaction timing, and the relationship between particular account holders and the attacks.

Binance General Counsel Eleanor Hughes called the ruling "a complete vindication" and said the company is "confident that no amended pleading will be able to cure the fundamental deficiencies the Court identified." Zhao, who pleaded guilty to federal AML and sanctions charges in November 2023 and was later pardoned by President Trump, had accused the plaintiffs of attempting to "piggyback" on Binance's $4.3 billion criminal settlement.

The dismissal arrives during an intense period of scrutiny over Binance's compliance record. The exchange has spent the past two weeks battling allegations from Sen. Richard Blumenthal and media reports that internal investigators discovered $1.7 billion in flows to Iran-linked entities and were subsequently fired. The Raanan case, brought by October 7 survivors, and a third lawsuit filed in North Dakota in November 2025, remain active.