A federal court in Alabama has dismissed key parts of a 2024 lawsuit alleging that Binance and its former CEO Changpeng “CZ” Zhao facilitated funding to terrorist groups. The judge required plaintiffs to file an amended complaint by April 10, calling for a higher standard of evidence. This marks the second recent U.S. court decision to grant a dismissal in similar cases alleging violations of the Anti-Terrorism Act.
A federal court in Alabama has dismissed significant portions of a lawsuit against Binance, Binance.US, and former CEO Changpeng “CZ” Zhao. The 2024 complaint alleged the cryptocurrency exchange violated the Anti-Terrorism Act by facilitating fund transfers to Hamas.
Magistrate Judge Chad Bryan granted Zhao’s motion to dismiss but ordered plaintiffs to submit a second amended complaint by April 10. “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,” said Bryan.
Binance said the ruling represented a “full and complete legal victory.” This follows a similar dismissal last week in a New York federal court, which cited a lack of personal jurisdiction according to a statement from the company.
Another judge in New York, however, acknowledged that different allegations against Binance for circumventing anti-terror financing rules had survived a motion to dismiss in a separate case. “While the Court has stayed discovery, this case is not closed,” stated Judge Jeannette Vargas in a related order.
“Sanctions compliance and terrorism financing are serious matters of law – they require evidence, legal rigour, and due process,” said Binance general counsel Eleanor Hughes. She noted courts have examined these claims twice and found them without merit.
The exchange faces ongoing media and congressional scrutiny over reports it processed over $1 billion for entities connected to Iran. Binance has largely denied these claims and filed a defamation lawsuit against the Wall Street Journal over its reporting.
