Binance declares 'complete legal triumph' following Alabama court decision
A judge approved Changpeng Zhao's dismissal motion, while simultaneously requiring plaintiffs in the Binance lawsuit to submit an amended complaint or risk facing complete or partial case dismissal.
An Alabama federal court has approved a dismissal motion concerning a 2024 lawsuit targeting Binance, its distinct American division Binance.US, and Changpeng "CZ" Zhao, the exchange's former chief executive, regarding accusations that the digital currency platform enabled fund transfers to terrorist organizations.
According to a Wednesday ruling, Magistrate Judge Chad Bryan of the US District Court for the Middle District of Alabama approved a dismissal motion submitted by Zhao that sought to have substantial sections of the lawsuit thrown out. The lawsuit, which was submitted in February 2024, claimed that all three defendants "violated, and may be continuing to violate, the Anti-Terrorism Act" through enabling monetary transfers to Hamas.
Although Bryan approved the dismissal motion, he simultaneously mandated that the plaintiff group file a second amended complaint by April 10 at the latest or potentially confront "the prospect of a 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. The operative pleading thus must demonstrate a commensurate level of seriousness before the action will be permitted to proceed."
Judge Chad Bryan
Following the court's decision, Binance issued a Thursday statement characterizing the outcome as a "full and complete legal victory."
Last week, a judge presiding over the US District Court for the Southern District of New York approved a dismissal citing "lack of personal jurisdiction" in a comparable lawsuit filed against the cryptocurrency exchange. Nevertheless, US District Judge Jeannette Vargas recognized that a different court within the same district had previously determined that accusations of "widespread, intentional circumvention of anti-terror financing regulations" against Binance had been adequate to withstand a dismissal motion in another separate case.
"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."
Eleanor Hughes, Binance general counsel
"While the Court has stayed discovery, this case is not closed. Moreover, this Court retains the inherent authority to determine if counsel and the parties are abiding by their preservation obligations."
Judge Jeannette Vargas
Binance under media, congressional scrutiny over Iran
Against the backdrop of the US-Israel conflict with Iran, numerous media organizations have published reports indicating that Binance terminated employees who disclosed that the organization had processed over $1 billion in cryptocurrency transactions involving entities linked to the country, which subsequently triggered an investigation by the US Senate.
Binance has predominantly rejected these allegations and has initiated a defamation lawsuit against the Wall Street Journal concerning its coverage of a Justice Department investigation into Iran's purported utilization of the platform to circumvent sanctions.