TL;DR
- A federal court in Alabama dismissed major allegations against Binance, Binance.US, and former CEO Changpeng Zhao regarding the transfer of funds to terrorist groups.
- The court allowed plaintiffs to file an amended complaint but emphasized legal rigor is required.
- Binance declared the decision a “full and complete legal victory”, reinforcing its position amid ongoing scrutiny over sanctions compliance and cryptocurrency transfers.
A federal judge in Alabama has dismissed a large portion of a 2024 lawsuit against Binance, Binance.US, and former CEO Changpeng “CZ” Zhao, which accused the exchange of facilitating transfers to terrorist organizations. The ruling marks a significant legal development for Binance as it continues to navigate multiple cases concerning allegations of improper fund transfers and sanctions violations.
Court Orders Second Complaint But Supports Binance
Magistrate Judge Chad Bryan of the U.S. District Court for the Middle District of Alabama granted Zhao’s motion to dismiss substantial parts of the complaint, originally filed in February 2024. The plaintiffs must submit a second amended complaint by April 10 or face total or partial dismissal.
“The underlying harm here is serious; the allegation that the defendants are implicated is serious; the potential liability the plaintiffs seek to impose is serious; and the weight upon the court is serious,” Bryan said.
He stressed that any new filing must reflect the same level of seriousness before proceeding.
Legal Implications For Binance Amid Ongoing Scrutiny
Binance’s general counsel Eleanor Hughes emphasized that the court’s ruling reinforces the company’s commitment to compliance and due process.
“Sanctions compliance and terrorism financing are serious matters of law – they require evidence, legal rigour, and due process. Courts have now examined these claims on two separate occasions and found them to be without merit,” Hughes said.
The Alabama decision follows a similar dismissal in New York, where a judge ruled against the plaintiffs for lack of personal jurisdiction, highlighting ongoing challenges in claims targeting the exchange.
Binance’s Position in Broader Crypto Regulation
The ruling comes as Binance faces media and congressional scrutiny related to alleged crypto transactions involving Iran. While some reports suggested the exchange facilitated over $1 billion in transactions linked to sanctioned entities, Binance has consistently denied wrongdoing. The company has also filed a defamation lawsuit against the Wall Street Journal over its reporting on a Justice Department investigation. The latest Alabama decision strengthens Binance’s legal stance, reaffirming its ability to defend against high-profile claims while continuing operations in the U.S.
