Binance faces lawsuit over allegedly helping Hamas

The lawsuit, filed on Wednesday, alleges that Binance allowed Hamas to trade on its platform and also seeks damages under the US anti-terrorism act.

Binance faces lawsuit over allegedly helping Hamas
Smartphone with displayed Binance logo and representation of cryptocurrencies are placed on a keyboard in this illustration taken, June 8, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

The backstory: It's no secret that the crypto world has been under a lot of scrutiny, and recent events have brought Binance, the world's largest crypto exchange, into the spotlight as it goes back and forth with the US government over crypto regulation. 

Troubles with crypto misuse were especially highlighted by the lawsuits against Sam Bankman-Fried, co-founder of the now-closed FTX platform, and the BitMEX founders. Bankman-Fried was recently convicted of fraud and money laundering and is facing sentencing in March. In 2022, the founders of BitMEX admitted to not following anti-money laundering rules, emphasizing the lack of regulations in the crypto space

More recently: Last March, the US Commodity Futures Trading Commission (CFTC) accused Binance of violating anti-money laundering and sanctions laws, saying it failed to report shady transactions involving terrorist groups, ransomware, scams and more. One big accusation was that Binance was used to send money to Hamas, the Palestinian Islamic Jihad, al-Qaeda and the Islamic State of Iraq and Syria.

Binance pleaded guilty, resulting in a historic US$4.3 billion settlement. Founder Changpeng Zhao also pleaded guilty to charges and stepped down as CEO. He was fined US$50 million and could face time in prison.

The development: Binance is in hot water again for similar allegations. Judith Raanan, an American mom who was held hostage by Hamas along with her daughter, and two relatives of men killed in the October 7 attack on Israel are suing the exchange. 

The lawsuit, filed on Wednesday, alleges that Binance allowed Hamas to trade on its platform and also seeks damages under the US anti-terrorism act, saying that Binance's actions count as "aiding and abetting" the terrorist organization and facilitating violence. It also points fingers at Iran for supporting Hamas (financially and with weapons) and accuses Syria of contributing to the group's arsenal. The plaintiffs are seeking damages against the two countries as state sponsors of terrorism. 

Another case was also filed on Wednesday against Iran, suing the country for at least US$1 billion. This lawsuit, brought by more than 60 victims of the October 7 attack and family members of those killed or taken hostage, accuses Iran of aiding Hamas. These lawsuits are the first of what might be a wave targeting Hamas and its networks. 

Key comments: 

"We have been working on this lawsuit for weeks and believe that anyone who aids terrorism should be held accountable," said Robert Seiden, a lawyer for Raanan and the families, in a statement.

"Iran consistently and continuously provided funding to Hamas in the amount of a hundred million U.S. dollars each year for the purpose of allowing Hamas to buy weapons and pay its terrorist fighters and otherwise carry out its terrorist operations," said the complaint.

"Binance became the world's largest cryptocurrency exchange in part because of the crimes it committed — now it's paying one of the largest corporate penalties in U.S. history," said Attorney General Merrick Garland in a press release in November