Oct. 7 Victim Families Sue Binance Over $1B in Secret Funding Claims

Why North Dakota Matters?

The plaintiffs selected North Dakota as the venue after investigators traced specific Hamas-linked transactions that passed through accounts connected to Kindred, a small town in the state. According to court documents, the alleged flows represent years of activity that occurred before and after the October 7 attacks, creating what victims describe as a “direct line” between Binance’s compliance failures and the operational capacity of designated terrorist groups.

The complaint spans hundreds of pages and draws on blockchain analysis, previous criminal investigations and whistleblower material from Binance’s internal communication channels. It argues that the exchange created an environment where anonymity, high-velocity internal transfers and offshore corporate structures made it unusually attractive to actors seeking to bypass sanctions and traditional financial oversight.

The allegations land in a landscape shaped by earlier enforcement waves. In 2020, U.S. authorities seized hundreds of crypto wallets linked to Hamas, al-Qaeda and ISIS. That same year, the Al-Qassam Brigades’ online fundraising operations were dismantled after Israel’s counter-terror bureau froze dozens of wallets. Türkiye carried out arrests in 2022 linked to ISIS facilitators using crypto channels, and the U.S. Treasury has repeatedly warned that loosely regulated exchanges create structural AML gaps.

These precedents add weight to the current case, which the plaintiffs say represents the most extensive pattern of crypto-enabled terror financing ever brought before a U.S. court.

Several passages in the lawsuit revisit earlier investigations that described Binance’s compliance culture as fragmented and under-resourced. Plaintiffs cite exchanges between staff in which employees flagged “obviously suspicious” accounts but lacked authority or internal clarity to enforce rapid off-boarding.

The filing also highlights an example involving a young Venezuelan woman whose transactional volumes exceeded one hundred million dollars despite a profile that, according to investigators, showed no link to any legitimate business activity capable of generating such flows. Lawyers argue that cases like this illustrate how sanctioned groups could shield activity behind seemingly random account holders.

Binance’s Response

Binance has not commented on the specifics of the North Dakota filing but maintains that it complies fully with international sanctions frameworks. The exchange has repeatedly emphasized that it now operates under strict oversight, including an independent compliance monitor installed as part of its 2023 agreement with the U.S. Department of Justice.

That settlement resulted in a 4.3 billion dollar penalty, Zhao’s resignation as CEO and a four-month federal sentence.

Despite these penalties, the plaintiffs contend that Binance’s earlier years created lasting damage. They say the platform’s past design choices enabled sanctioned entities to build networks that continued to operate even after global pressure forced policy changes. The new lawsuit follows a separate civil case in Manhattan brought in 2024 by other Hamas and PIJ victims.

That case survived a dismissal attempt, suggesting that courts are increasingly willing to examine crypto-linked terror financing under the Justice Against Sponsors of Terrorism Act.

High Stakes Ahead

If the lawsuit survives early jurisdictional challenges, the discovery phase could force Binance to release extensive internal records, including compliance reports and transaction logs from its peak growth years. That process may influence not only this case but also the broader regulatory environment surrounding global crypto exchanges.

For the families behind the lawsuit, the objective is accountability, financial redress and a legal precedent that limits the operational reach of designated groups. For Binance, the case tests whether its current compliance posture is strong enough to convince courts that past failures no longer define the platform.

Parting Shot

The case underscores a persistent tension within the digital-asset industry: while most crypto activity is legitimate and transparent, weak oversight at individual exchanges can create vulnerabilities that high-risk actors exploit.

The North Dakota filing places this issue at the centre of public debate once again, at a time when regulators worldwide are racing to close compliance gaps. Whatever outcome emerges, the lawsuit represents a milestone in the evolving relationship between crypto platforms, global security frameworks and the legal responsibilities attached to financial intermediaries.