Crypto’s Role in Iran’s Global Terrorism Exposed by New Lawsuit Against Binance

Cryptocurrency has come under increasing scrutiny for its alleged role in subverting the United States’ sanctions against Iranian state-sponsored terrorism, with the world’s top platform receiving an unwanted spotlight this week.

On Monday, lawyers in North Dakota sued Binance, the world’s largest cryptocurrency exchange, and its CEO, Changpeng Zhao, alleging the company had facilitated more than $1 billion in funding to designated terrorist groups backed by the Islamic regime in Iran. The US federal lawsuit was filed on behalf of victims of Hamas’s Oct. 7, 2023, invasion of and massacre across southern Israel.

The suit represents the latest instance of cryptocurrency allegedly playing a role in Iran’s efforts to destroy the Jewish state. Leaders of Iran and its network of terrorist groups named in the complaint, including Hamas, Hezbollah, and Palestinian Islamic Jihad (PIJ), routinely declare their goal of wiping Israel off the map.

Israel has previously clashed with Binance in its counter-terrorism efforts. In May 2023, the Jewish state seized nearly 200 accounts on the platform linked to Islamist groups, including ISIS. In November 2022, researchers at Nobitex said that since 2018, Binance had processed $7.8 billion through Iran-linked accounts.

This week’s suit adds further evidence of the recurring link between Iranian terrorism and cryptocurrency, identifying the high profit potential for those willing to attempt to dodge US sanctions against terror financing.

Binance has declined to discuss the lawsuit but told Reuters that “we comply fully with internationally recognized sanctions laws.”

Jonathan Missner, the attorney who represents the Oct. 7 victims and their families named as plaintiffs in the suit, said that Binance’s alleged facilitating of payments to terror groups “was not a compliance” but rather “a business model.”

“Our investigation shows that Binance built systems designed to evade oversight, using its off-chain network and weak controls to move enormous sums for sanctioned groups,” he said in a statement.

The lawsuit states that “by knowingly moving and concealing the movement of hundreds of millions of dollars for Hamas, the IRGC [Iran’s Islamic Revolutionary Guard Corps], Hezbollah, and PIJ, Defendants Binance Holdings Limited, Changpeng Zhao, and Guangying ‘Heina’ Chen provided pervasive and systemic assistance to these terrorist organizations.”

Chen is described in the suit as a co-founder of Binance and “de facto CFO.” The lawsuit charges that Zhao and Chen “materially contributed to the Oct. 7 attacks and to subsequent terrorist attacks perpetrated by Hamas, Hezbollah, and PIJ.”

One of the plaintiffs named in the suit is Eyal Balva, whose son Omer died in combat following the Oct. 7 atrocities while serving in the Israel Defense Forces. “Binance’s platform moved the money that helped fund the violence that destroyed our family,” he said.

Zhao and Binance — the world’s largest crypto trading platform with $300 billion in daily trades and more than 280 million users — have previously faced penalties for criminality. As part of a 2023 settlement agreement with the US Treasury Department’s Financial Crimes Enforcement Network, Binance paid $4.3 billion in fines and restitution. Zhao was previously convicted of money laundering and served four months imprisonment. US President Donald Trump pardoned Zhao, with analysts noting the decision came following a sizable investment by Binance into the Trump family Crypto exchange platform World Liberty Financial.

The lawsuit also notes a money laundering scheme involving transferring gold from Venezuela to Iran to overcome American sanctions, and that Binance “pitched itself to terrorist organizations, narcotics traffickers, and tax evaders as beyond the reach of any single country’s laws or regulations.”

On Wednesday, Iran’s Foreign Minister Abbas Araghchi put out a statement condemning the possibility of potential US military action against Venezuela, labeling the Trump administration’s posture a “bullying approach.”

The filing against Binance comes in a year in which Australian authorities have highlighted the alleged role of cryptocurrency in directing antisemitic hate crimes in Melbourne and Sydney, prompting the expulsion of Iran’s ambassador in August.

Australian Security Intelligence Organization (Asio) chief Mike Burgess said that his team had found connections “between the alleged crimes and the commanders in Iran’s Islamic Revolutionary Guard Corps, the IRGC.”

He added, “They’re just using cut-outs, including people who are criminals and members of organized crime gangs to do their bidding or direct their bidding.”

Cryptocurrency has long functioned as a tool of Iran to evade US sanctions. The high energy costs from the so-called “mining” of cryptocurrency — powerful computers must run complex programs in order to generate additional tokens for trading — has put a strain on Iran’s electrical system. Mohammad Allahdad, Iran’s deputy director of power generation, said that the business practice “represents around 5 percent of total electricity consumption” and “it accounts for up to 20 percent of the current power deficit.”

Allahdad also warned that the heat from crypto mining devices was “intense” and could cause fires. “We’ve had multiple reports from fire departments about fires linked to mining rigs, some of which spread to neighboring homes,” he noted.

Now is potentially the worst time for fires in Iran, given a persistent devastating drought and ongoing government mismanagement of the water system. The situation has reached the point that Iran’s president said last week that the country had “no choice” but to evacuate and move the capital Tehran.

“The truth is, we have no choice left — relocating the capital is now a necessity,” Iranian President Masoud Pezeshkian said in a speech.

The US State Department recently noted that Iran has provided Lebanese Hezbollah with more than $100 million each month this year. Critics of the regime have pointed out that funds spent in the war effort to destroy Israel could have gone toward improving infrastructure to better support the civilian population. Analysts at the Center for Strategic and International Studies noted that one-third of the water supply to Tehran is lost through leaks and theft.