The families of victims from the October 7 Hamas attack on Israel have filed a lawsuit against cryptocurrency exchange Binance, accusing it of enabling the fundraising activities of the terrorist group. The legal action, lodged in the Southern District Court of New York, claims that Binance processed numerous transactions linked to Hamas and other Palestinian terrorist groups between 2017 and mid-2023, providing a covert financing mechanism that the exchange allegedly concealed from U.S. regulators.
The plaintiffs, including former hostages and relatives of those killed or injured in the attack, are seeking compensatory and punitive damages under the United States Anti-Terrorism Act. They argue that Binance’s failure to implement adequate Know Your Customer (KYC) and Anti-Money Laundering (AML) policies allowed the platform to be exploited by illicit actors, including terrorist organizations.
This lawsuit comes in the wake of a significant settlement between Binance and the U.S. Department of Justice (DOJ) in November, where the exchange agreed to pay $4.3 billion in fines for violating U.S. sanctions and failing to prevent money laundering. The settlement highlighted that Binance knowingly allowed transactions that supported Hamas and other terror groups, prompting federal regulators to impose extensive monitoring on the platform.
Moreover, the plaintiffs accuse the governments of Iran and Syria of being complicit in financing terrorism, with Iran being identified as a leading sponsor of Hamas. These allegations extend to claims that both countries provided substantial financial and logistical support to the group, facilitating the deadly October 7 attack which resulted in over 1,200 fatalities and numerous kidnappings.
The lawsuit underscores the broader issue of cryptocurrencies being used to fund terrorism, a concern that has gained increased attention following the Hamas attack. Reports suggest that terrorist groups received around $93 million in crypto between August 2021 and June 2023. Although blockchain analytics firm Chainalysis has questioned the accuracy of these figures, the incident has fueled calls for stricter regulatory measures to prevent the misuse of digital assets.
In response to the attack, Binance took steps to freeze accounts associated with Hamas at the request of Israeli authorities. However, the plaintiffs maintain that the exchange’s prior negligence in enforcing regulatory standards facilitated the initial misuse of its platform.
This case highlights the ongoing challenges in regulating the cryptocurrency industry and ensuring that digital financial systems are not exploited for illicit purposes. The outcome of this lawsuit could set a precedent for how cryptocurrency exchanges are held accountable for their role in global financial networks.
