Terror Victims File Lawsuit Against DOJ Over Binance Settlement

Jimmy Aki
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A group of individuals affected by state-sponsored terrorism has taken legal action against the U.S. Department of Justice (DOJ), alleging it failed to allocate a significant portion of Binance’s $4.3 billion settlement to the Victims of State Sponsored Terrorism Fund.

Binance Settlement and DOJ’s Alleged Misallocation of Funds

Binance, a leading cryptocurrency exchange, agreed to a settlement with the U.S. government in November 2023, amounting to $4.3 billion. The company admitted violating U.S. sanctions and the International Emergency Economic Powers Act by allowing transactions involving sanctioned countries, including Russia.

However, the plaintiffs filed the lawsuit on September 25 in a Washington, D.C. federal court, claiming that the DOJ has only deposited around $898.6 million from the settlement into the Victims of State Sponsored Terrorism Fund, which falls short of the required allocation.

The plaintiffs argue that, by law, the DOJ is mandated to place 100% of criminal proceeds and 75% of civil proceeds from cases like Binance’s settlement into the fund.

The lawsuit also claims that the DOJ plans to allocate approximately $1.5 billion of the Binance settlement into a general crime victims’ fund, which the plaintiffs argue violates legal provisions.

The plaintiffs are asking the court to order the DOJ to deposit all qualifying proceeds from the settlement into the terrorism victims’ fund.

DOJ’s Investigation and Changpeng Zhao’s Guilty Plea

The lawsuit targets the DOJ and names other significant U.S. government bodies as defendants. These include the Commodity Futures Trading Commission, Attorney General Merrick Garland, the Treasury Department, the Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC).

The inclusion of these agencies reflects the complexity of regulatory oversight involved in monitoring cryptocurrency platforms like Binance.

The plaintiffs’ legal case rests on the Victims of State Sponsored Terrorism Act, which specifies how proceeds from criminal and civil cases must be allocated. According to their claim, the DOJ has failed to meet its legal obligations, delaying compensation to terrorism victims.

In a related development, Special Master Mary Patrice Brown announced that by January 1, 2025, the U.S. Victims of State Sponsored Terrorism Fund will authorize its fifth round of payments, with at least $940 million available for eligible claimants.

This includes funds from the U.S. government’s case against Binance, which agreed to forfeit $898 million for violating U.S. sanctions laws.

Notably, Changpeng Zhao, Binance’s former CEO, was charged with violating U.S. financial laws, including the Bank Secrecy Act. As part of the plea agreement, Zhao agreed to step down as CEO and paid a $50 million personal fine, resulting in the emergence of Richard Teng as the new Binance CEO.

Additionally, in April 2024, Zhao was sentenced to four months in jail and he’s set to be released on September 29.

Binance has faced a series of investigations by U.S. authorities, notably the DOJ’s national security and crime divisions. In May 2023, the exchange was accused of offering services to Russian customers after the U.S. had imposed sanctions on Russia in April 2022.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.