By Jonathan Stempel
NEW YORK, March 6 (Reuters) – A federal judge on Friday dismissed a civil lawsuit seeking to hold Binance, the world’s largest cryptocurrency exchange, and its founder, Changpeng Zhao, liable for transactions that allegedly helped terrorist groups carry out 64 attacks around the world.
U.S. District Judge Jeannette Vargas in Manhattan said the 535 plaintiffs, including victims and victims’ families, did not plausibly allege that the defendants “culpably associated themselves with these terrorist attacks, participated in them as something they wanted to achieve, or sought by their actions to ensure their success.”
The plaintiffs said the attacks occurred between 2017 and 2024 and attributed them to what they called foreign terrorist groups (“FTOs”), including Hamas, Hezbollah, Iran’s Revolutionary Guard, Islamic State, Kataib Hezbollah, Palestinian Islamic Jihad and Al Qaeda.
They sought to hold Binance and Zhao responsible for the alleged transfer of hundreds of millions of dollars in cryptocurrency to and from the FTOs, and billions of dollars of alleged transactions with Iranian users that benefited the proxies who carried out the attacks.
Vargas said that while Binance and Zhao may have been generally aware of the exchange’s role in terrorist financing, their only relationship with the FTOs was that “they, or their affiliates, had accounts and had transacted on the Binance exchange in an arm’s length relationship.”
The judge also called the plaintiffs’ 891-page, 3,189-paragraph lawsuit “totally unnecessary” despite the “serious” allegations. He said the plaintiffs can modify “their claim.”
Attorneys for the plaintiffs did not immediately respond to requests for comment.
In court documents, Binance and Zhao said they condemned terrorism.
Zhao also accused the plaintiffs of attempting to “take advantage” of Binance’s November 2023 guilty plea and $4.32 billion criminal penalty for violating federal anti-money laundering and sanctions laws, to justify triple damages under the Federal Anti-Terrorism Act.
“Binance was pleased to see that the court in this case correctly dismissed these unfounded allegations,” a spokesperson for the exchange said in an email. “Binance takes compliance seriously and does not tolerate bad actors on its platform.”
Zhao’s lawyers had no immediate comment.
(Disclosure: Yahoo Finance has a partnership with Coinbase.)
(Reporting by Jonathan Stempel in New York; Editing by Franklin Paul)