On February 25, 2025, a Manhattan federal court sustained allegations that Binance Holdings Limited (“Binance”) and its founder Changpeng Zhao (“Zhao”) aided and abetted the October 7 attacks by knowingly permitting terror groups, including Hamas and Palestine Islamic Jihad (PIJ), to transact on the Binance platform. The decision breaks new ground in finding that a cryptocurrency exchange can be held liable for aiding and abetting a terrorist attack.
The plaintiffs in the case are over forty United States citizens or their family members who were killed, taken hostage, or injured in the October 7 attacks. In January 2024, the plaintiffs sued Binance and Zhao (“defendants”) under the Anti-Terrorism Act and the Justice Against Sponsors of Terrorism Act, which permit U.S. nationals who are victims of international terrorism to sue persons who committed or aided and abetted terror attacks. Plaintiffs alleged that defendants knew that Hamas and PIJ were transacting on their platform, and that cryptocurrency wallets linked to Hamas and PIJ moved over $60 million through the Binance platform in the years prior to the October 7 attacks. In June 2024, defendants filed a motion to dismiss the complaint.
In his 71-page painstaking decision on the motion to dismiss, Judge John G. Koeltl of the United States District Court for the Southern District of New York held (among other holdings) that plaintiffs adequately pled that defendants had aided and abetted the October 7 attacks. The Court highlighted plaintiffs’ “allegations that United States laws and regulations required Binance to implement robust anti-money laundering programs, perform due diligence on its customers, and file [Suspicious Activity Reports] with regulators flagging suspected illicit activity, all to prevent terrorists from accessing the United States financial system through the Binance exchange,” and that the defendants allegedly “failed to comply with—indeed, intentionally evaded—these regulatory requirements, thus fostering a financial ecosystem on which illicit actors, including terrorist organizations like Hamas and PIJ, transacted freely.”
The Court rejected defendants’ argument that they “learned only in hindsight that Hamas and PIJ were transacting on the platform,” finding instead that plaintiffs adequately pled “that the defendants knew in real-time that terrorists were transacting on the platform” and “took affirmative actions to enable terrorist groups to transact on the Binance platform.” For that reason, the Court concluded that plaintiffs’ allegations “capture the ‘essence’ of aiding-and-abetting liability: that Binance and Zhao ‘consciously and culpably participated’ in Hamas’s and PIJ’s wrongdoing.”
Judge Koeltl’s decision was issued several weeks after a wide-ranging oral argument on defendants’ motion to dismiss on January 30, 2025, at which the Court expressed skepticism at defendants’ arguments for dismissal of plaintiffs’ aiding and abetting claims. In one notable exchange, defendants’ counsel argued that under U.S. Supreme Court precedent, plaintiffs were required to allege that Binance gave preferential treatment to Hamas and PIJ, and that plaintiffs had merely alleged that “Binance treated transactions and wallets that the plaintiffs now associate with terror groups . . . like they did all other wallets.” Judge Koeltl responded: “It is, on one level, somewhat breathtaking to take the position that it’s OK for a regulated entity to say, sure, we accept terrorist accounts which allow the transmission of funds to terrorists because we treat terrorists just like anyone else, and if you want to use our account to finance what you do, that’s OK.”
Judge Koeltl’s February 25 decision is linked here, and the January 30 oral argument transcript is linked here.
Plaintiffs are represented by Seiden Law LLP managing partner Robert Seiden, Seiden Law partner and head of litigation Amiad Kushner (who argued the motion to dismiss for plaintiffs), partners Jake Nachmani and Dov Gold, and Senior Counsel Jennifer Blecher. Steve Perles, Josh Perles and Edward MacAllister of Perles Law Firm, P. C. are co-counsel for Plaintiffs.