Why Did the Court Dismiss the Case?
A federal judge in Manhattan dismissed a lawsuit accusing Binance of helping finance terrorism, ruling that the plaintiffs failed to connect the exchange’s conduct to specific attacks. The case was brought by 535 victims and relatives of victims linked to 64 attacks carried out between 2016 and 2024 by groups including Hamas, Hezbollah, al-Qaeda, ISIS, the IRGC, and Palestinian Islamic Jihad.
In a 62-page opinion from the US District Court for the Southern District of New York, Judge Jeannette A. Vargas ruled that the plaintiffs did not plausibly show that Binance provided “knowing and substantial assistance” to the attacks as required under the Justice Against Sponsors of Terrorism Act (JASTA).
The court accepted that the exchange may have been aware that terrorist-linked actors used its platform. The opinion stated that the plaintiffs adequately alleged Binance was “generally aware” of terrorist financing activity, citing its history of weak compliance controls, use by sanctioned Iranian users, and wallets linked to designated organizations. But the judge ruled that general awareness alone does not satisfy the legal threshold required to hold a financial institution liable.
Investor Takeaway
What Evidence Did the Plaintiffs Present?
The plaintiffs argued that Binance’s alleged violations of sanctions rules and anti-money laundering controls enabled terrorist organizations to receive large sums of money. The complaint cited billions of dollars in transactions tied to Iranian entities, the exchange’s hosting of the sanctioned nested exchange Garantex, and internal communications suggesting that company executives knew certain terrorist groups were using the platform.
The court acknowledged these allegations in detail. It pointed to roughly $56 million in Hamas-linked transfers and about $59 million tied to Palestinian Islamic Jihad that moved through Binance accounts. The exchange also acknowledged internally as early as 2019 that Hamas-linked activity was present on the platform.
Even so, the judge ruled that the plaintiffs’ argument relied on the idea that because Binance handled illicit funds broadly, some portion must have financed the attacks. The court described that reasoning as too indirect, noting that the theory depended on fungibility rather than proof that specific transfers were connected to specific incidents.
How Did a Recent Appeals Ruling Influence the Decision?
A key factor was a 2025 ruling from the US Court of Appeals for the Second Circuit in Ashley v. Deutsche Bank. That decision concluded that a bank’s general facilitation of money laundering for clients linked to terrorism does not automatically create liability under JASTA without a direct connection to an attack.
Judge Vargas applied the same legal standard in the Binance case. The opinion also addressed another lawsuit against the exchange, Raanan v. Binance, which had survived a motion to dismiss earlier in 2025 on similar allegations related to Hamas and Palestinian Islamic Jihad. Vargas noted that the earlier case was decided before the appeals court clarified the legal standard.
Because the appellate ruling now controls the interpretation of the law, the judge concluded that the claims in the present case could not proceed based on the facts currently presented.
Investor Takeaway
What Did the Court Say About the Complaint?
The court also criticized the scope and length of the plaintiffs’ filing. The amended complaint stretched to 891 pages. Judge Vargas described that size as “wholly unnecessary,” noting that a lengthy section describing Iranian political history “added little to the Plaintiffs’ claims.”
Despite dismissing all claims, the court granted the plaintiffs 60 days to file another amended complaint. The opinion suggested that more precise allegations could potentially address the deficiencies, particularly evidence identifying specific wallet ownership, transaction timing, and links between particular accounts and the attacks.
Binance welcomed the decision. General counsel Eleanor Hughes called the ruling “a complete vindication” and said the company believes “no amended pleading will be able to cure the fundamental deficiencies the Court identified.”
What Legal Risks Still Remain for Binance?
The dismissal does not end all litigation involving the exchange. The Raanan case filed by survivors of the October 7 attacks remains active, and another lawsuit filed in North Dakota in late 2025 is also ongoing.
The ruling arrives during a period of scrutiny over Binance’s compliance record. Founder Changpeng Zhao pleaded guilty in November 2023 to federal anti-money laundering and sanctions violations tied to the exchange’s operations. The case formed part of a $4.3 billion settlement with US authorities.
Separately, members of the US Senate and media reports have recently questioned internal compliance findings related to Iranian-linked transactions on the platform. Those issues remain politically sensitive even as the civil lawsuit has been dismissed.
