US court throws out multi-billion-dollar terror lawsuit against Binance

A US federal judge has dismissed a sweeping lawsuit that attempted to hold cryptocurrency exchange Binance liable for 64 international terrorist attacks, effectively closing the door on a massive legal headache for the platform.

The 62-page ruling, handed down in the Southern District of New York, dismantled the core argument brought forward by 535 plaintiffs. The claimants alleged that the exchange’s historically loose compliance checks provided material support to designated terror groups. However, the court found absolutely no evidentiary link demonstrating that Binance actively assisted, conspired with, or even associated itself with the atrocities in question.

The judgment strikes a serious blow to the controversial legal theory that operating a high-volume, borderless digital asset exchange inherently equates to the facilitation of terrorism.

Eleanor Hughes, Binance’s general counsel, called the dismissal a “complete vindication.” He noted, “This dismissal is a complete vindication of all false allegations. The court has unambiguously rejected the false and damaging narrative that Binance assisted terrorists. We have always maintained that these claims were without merit, and today’s ruling confirms that. We will continue to defend ourselves aggressively against any litigation or reporting that misrepresents who we are and how we operate.”

Background to Binance terrorism charges in the US 

This case represents one of the most significant legal hurdles Binance has faced in the US civil court system. The lawsuit was filed against a backdrop of intense scrutiny from US regulators. In late 2023, Binance reached a historic $4.3 billion settlement with the US Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) over violations related to anti-money laundering (AML) and sanctions.

Sensing an opening following those admitted regulatory failures, the 535 plaintiffs argued that Binance’s historically lax KYC (Know Your Customer) protocols allowed terrorist groups to move funds. They sought to leverage the Anti-Terrorism Act (ATA) to hold the platform financially liable for damages. The ATA allows victims of terrorism to sue those who provide substantial assistance to such acts.

In its defence, Binance pointed to its radical corporate restructuring over the past two years, which includes pouring hundreds of millions of dollars into cutting-edge blockchain monitoring tools and recruiting former law enforcement personnel to sever ties to illicit finance.

The ruling establishes a stark legal reality for the growing litigation finance sector targeting the crypto industry: while a platform might incur heavy regulatory fines for compliance lapses, the evidentiary bar for proving direct, material support for terrorism in a civil court remains exceptionally high.

While the plaintiffs have been granted a 60-day window to try and patch up their case with an amended complaint, a procedural allowance stemming from a separate appellate tweak to pleading standards, Binance’s legal team is betting that the fundamental flaws identified by the judge are fatal.

For the exchange, which is currently orchestrating a global, compliance-first pivot to secure operational licences in crucial markets like the UK and the European Union, the dismissal removes a profound reputational and financial threat.

The post US court throws out multi-billion-dollar terror lawsuit against Binance first appeared on Technext.