Why the terror financing case against Binance fell apart in court

A US federal court has dismissed a lawsuit accusing crypto exchange Binance of facilitating terrorism financing, ruling that the plaintiffs failed to establish the legal requirements needed to hold the platform liable under US anti-terror laws.

Federal judge throws out the terrorism financing lawsuit against Binance

In an opinion issued on March 6, Judge Jeannette A. Vargas of the US District Court for the Southern District of New York granted the defendants’ motion to dismiss the complaint brought by hundreds of victims and relatives of victims of terrorist attacks.

The plaintiffs, linked to 64 attacks worldwide between 2016 and 2024, alleged that Binance allowed accounts tied to terrorist groups and their intermediaries to operate on its platform. They argued that the exchange’s services enabled those actors to move funds and therefore amounted to aiding and abetting terrorism under the US Anti-Terrorism Act and the Justice Against Sponsors of Terrorism Act.

However, the court ruled that the complaint did not plausibly show that Binance knowingly provided substantial assistance to terrorist organizations.

According to the opinion, the allegations largely relied on claims that certain wallets linked to sanctioned groups had used the exchange, but they failed to demonstrate that Binance was aware of those connections at the time.

Judge Vargas also found that the plaintiffs did not sufficiently link the alleged cryptocurrency transactions to the specific attacks cited in the lawsuit. The court said the complaint relied on generalized claims about terrorist use of digital assets rather than concrete allegations showing that funds moving through Binance directly supported the incidents referenced by the plaintiffs.

Because of these shortcomings, the court concluded that the complaint failed to meet the legal standard required for aiding-and-abetting liability under US anti-terror statutes.

While dismissing the case, the judge granted the plaintiffs 60 days to file an amended complaint addressing the deficiencies identified in the ruling. If they succeed in presenting stronger allegations, the case could proceed in federal court.