Crypto exchanges have faced a wave of civil litigation in U.S. courts alleging complicity in terrorism financing, and Binance is now citing two recent rulings as evidence those claims lack legal grounding.
A federal magistrate judge in Alabama’s Middle District, Judge Chad Bryan, granted a motion to dismiss significant portions of a February 2024 complaint against Binance, its U.S. affiliate Binance.US, and former CEO Changpeng “CZ” Zhao. The complaint alleged the three defendants violated the Anti-Terrorism Act by facilitating fund transfers to Hamas. While the motion — filed by Zhao — was granted, the judge ordered plaintiffs to submit a second amended complaint by April 10 or face “the prospect of a total or partial dismissal.”
Judge Bryan made the stakes explicit in his order: “The underlying harm here is serious; the allegation that the defendants are implicated is serious; the potential liability the plaintiffs seek to impose is serious; and the weight upon the court is serious.” He added that any operative pleading “must demonstrate a commensurate level of seriousness before the action will be permitted to proceed.”
Binance characterized the outcome in stronger terms. In a Thursday statement, the company called the ruling “full and complete legal victory” — language the order itself does not use, given the plaintiffs retain an opportunity to refile.
A Second Dismissal in New York
The Alabama ruling follows a separate dismissal last week in the U.S. District Court for the Southern District of New York, where Judge Jeannette Vargas dismissed a comparable case against the exchange for “lack of personal jurisdiction.” Judge Vargas did, however, note that another court within the same district had previously ruled that allegations of “widespread, intentional circumvention of anti-terror financing regulations” were sufficient to survive a motion to dismiss in a different proceeding — a distinction that limits how broadly either dismissal can be read. The New York court also made clear the case is not fully closed, stating it “retains the inherent authority to determine if counsel and the parties are abiding by their preservation obligations.”
Binance general counsel Eleanor Hughes cited both outcomes: “Courts have now examined these claims on two separate occasions and found them to be without merit. Sanctions compliance and terrorism financing are serious matters of law — they require evidence, legal rigour, and due process.”
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Congressional and Media Pressure Continues
The courtroom outcomes arrive while Binance remains under separate scrutiny. Multiple media outlets reported that the company dismissed employees who flagged over $1 billion in crypto transactions allegedly linked to Iranian entities, prompting a U.S. Senate probe. The firm has denied those claims and filed a defamation lawsuit against the Wall Street Journal over its coverage of a Justice Department investigation into Iran’s alleged use of the platform to circumvent sanctions.
The two dismissals narrow the immediate legal exposure from the terrorism financing complaints, but the Alabama plaintiffs have a defined window to strengthen their case, and the broader regulatory and congressional scrutiny around the company’s compliance history remains active.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial or investment advice.
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