An Alabama federal court has denied a request to dismiss a 2024 complaint against Binance, the US-based spin-off entity Binance.US, and former Binance CEO Changpeng “CZ” Zhao, alleging that the cryptocurrency exchange facilitated the transfer of funds to terrorist groups.
In an order Wednesday, U.S. Magistrate Judge Chad Bryan of the Middle District Court of Alabama granted Zhao’s request to dismiss key parts of the complaint. The complaint, filed in February 2024, alleges that the three defendants “violated and may continue to violate the Anti-Terrorism Act” by facilitating the transfer of funds to Hamas.
While Bryan granted the motion to dismiss, he also ordered that the class of plaintiffs file a second amended complaint no later than April 10 or face “dismissal in whole or in part.”
“The underlying harm here is serious; the allegations that the defendants are involved in this allegation are serious; the potential liability that the plaintiffs are seeking is serious; the weight on the lawsuit is serious,” Bryan said. “Therefore, an urgent application must demonstrate a high level of seriousness before it is allowed to proceed.”
In a statement Thursday following the ruling, Binance said it represented a “complete and total legal victory.”
Last week, a US District Court judge for the Southern District of New York was dismissed for “lack of personal jurisdiction” in a similar case against the company. However, U.S. District Judge Jeannette Vargas acknowledged that another court in the circuit had ruled that Binance’s allegations of “broad and willful disregard of anti-terrorist financing rules” were sufficient to survive a motion to dismiss the other case.
“Sanctions enforcement and terrorist financing are serious matters of law – they require evidence, legal rigor and due process,” said Binance General Counsel Eleanor Hughes. “The courts have now considered these claims in two separate cases and found them to be without merit.”
related to: Binance says US Senate investigation into Iran is based on “slanderous” reports
“While the Court has reserved discovery, this case is not closed,” Judge Vargas said in an order Wednesday regarding the Binance case in New York. “Furthermore, this Court retains inherent discretion to determine whether counsel and the parties have complied with their respective fiduciary obligations.”
Binance under media, congressional investigation on Iran
In the wake of the US-Israel conflict with Iran, many media outlets reported that Binance fired employees who reported that the company had facilitated more than $1 billion in crypto transactions to individuals linked to the country, prompting a US Senate investigation.
Binance largely denied the allegations and filed a lawsuit against the Wall Street Journal over its report on a Justice Department investigation into Iran’s alleged use of the exchange to circumvent sanctions.
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