More than 300 U.S. families have filed a civil lawsuit claiming that Binance and its former CEO, Changpeng Zhao, enabled transfers tied to Hamas and other militant groups. The accusations focus on alleged weak compliance practices that permitted illicit fund flows between 2017 and 2023. Binance denies any involvement, asserting that it complies with international regulations and does not knowingly support sanctioned organizations.
A new lawsuit filed in the United States targets Binance, placing the world’s largest crypto exchange under intense scrutiny. The complaint originates from hundreds of American families connected to the October 7, 2023 Hamas attack, who allege that the exchange allowed digital transfers related to militant activity. According to the filing, Binance failed to implement proper controls, which allegedly allowed large volumes of funds to move on its platform without verification that could block high-risk users.
Compliance Weaknesses and Alleged Transfers
The lawsuit contends that Binance operated for several years with limited identity checks and insufficient monitoring. A key issue highlighted is the use of omnibus wallets, which pool customer assets and make it difficult to determine who controls specific funds. Plaintiffs claim that this design facilitated the ability of users linked to terrorism to avoid detection while conducting transfers through the platform.
The filing further alleges that even when certain accounts were flagged internally or by authorities, users could still move assets to other internal wallets, thereby bypassing additional controls. According to the plaintiffs, this practice enabled continued access to digital finance for users connected to internationally sanctioned groups, potentially granting them more freedom than within conventional banking systems.
Binance’s Legal Track Record and Ongoing Debate
This lawsuit follows a significant regulatory settlement in 2023, when Binance agreed to pay $4.3 billion for violations related to anti-money laundering and sanctions oversight. Founder Changpeng Zhao stepped down as CEO after pleading guilty to compliance failures and later received a presidential pardon in 2025 after serving a short sentence. Critics argue that Binance did not adopt reforms strong enough to prevent repeated violations even after the settlement.
Binance rejects the latest accusations, insisting that it does not serve prohibited entities and that critics misunderstand how blockchain tracking operates. The company asserts that it cooperates with global authorities, utilizing analytical tools that make cryptocurrency more traceable than fiat transactions. Supporters argue that digital assets leave public audit trails, reducing the long-term feasibility of criminal financing.
This lawsuit arrives at a decisive moment for digital finance and could influence how exchanges are held responsible for compliance. It raises critical questions about liability, regulation, and innovation within an industry built on transparent, borderless settlement technology.