A recent lawsuit has emerged involving four individuals, including victims and their family members, who are taking legal action against the U.S. Department of Justice (DOJ). Filed on September 25 in a federal court in Washington, D.C., the suit centers around an alleged failure by the DOJ to distribute settlement funds related to state-sponsored terrorism. The plaintiffs argue that a $4.3 billion settlement issued by Binance, a prominent cryptocurrency exchange, was not properly allocated according to legal requirements.
The lawsuit asserts that, per the established rules, 100% of the settlement amount should be directed to the Victims of State Sponsored Terrorism Fund. However, the plaintiffs claim that only $898.6 million has been deposited into the fund so far.
In addition to the DOJ, other parties named as defendants include the Commodity Futures Trading Commission (CFTC), U.S. Attorney General Merrick Garland, and various agencies within the Treasury Department, such as the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC).
Although the DOJ has yet to issue a public response to the lawsuit, it previously stated its intention to deposit only $1.5 million into the victims’ fund, which the plaintiffs argue is contrary to the requirements of the Victims of State Sponsored Terrorism Act.
Victims of State-Sponsored Terrorism Sue DOJ Over Alleged Misallocation of $4.3 Billion Settlement Funds
According to this Act, in cases involving criminal proceeds, the full amount of the settlement should be allocated to the victims’ fund. Given that the Binance case is categorized as criminal, the DOJ is obligated to transfer the entire $4.3 billion settlement, a demand that the lawsuit aims to enforce.
The legal troubles surrounding Binance stem from serious allegations against the company and its CEO, Changpeng Zhao. In November 2023, Binance was accused of money laundering and violating the Bank Secrecy Act by providing services to Russia in violation of U.S. sanctions. Following the acceptance of these charges, the company finalized the $4.3 billion settlement. Zhao also faced personal penalties, including a $50 million fine, a mandatory resignation, and a four-month prison sentence.
Binance has been under investigation since 2018, with scrutiny escalating significantly by December 2020 when federal prosecutors sought access to internal documents related to the company’s anti-money laundering efforts. In March 2023, the CFTC initiated civil proceedings against Binance for failing to implement necessary safeguards against money laundering.
The Securities and Exchange Commission (SEC) subsequently filed a lawsuit in June 2023, leading to criminal charges by the DOJ in November, which have culminated in the ongoing settlement disputes and the current lawsuit.
