Four victims or families of victims of state-sponsored terrorism have filed a lawsuit against the U.S. Department of Justice (DOJ), accusing the department of improperly withholding or delaying their share of funds from Binance’s $4.3 billion settlement.
The lawsuit, filed on September 25 in a Washington, D.C. federal court, alleges that the DOJ has failed to allocate proceeds from the settlement into the Victims of State-Sponsored Terrorism Fund as required by law. According to the plaintiffs, the Victims of State Sponsored Terrorism Act mandates that 100% of criminal proceeds and 75% of civil proceeds from related cases be deposited into the fund.
However, the DOJ has reportedly only transferred $898.6 million into the fund, far below what the plaintiffs claim is owed.
Discrepancies in Fund Distribution
The DOJ has expressed plans to direct at least $1.5 billion into a fund for crime victims, which the lawsuit argues violates the provisions of the Victims of State Sponsored Terrorism Act. The plaintiffs are seeking a court order compelling the DOJ to deposit all qualifying proceeds from Binance’s settlement into the victims’ fund.
In addition to the DOJ, the lawsuit names several other government agencies and officials as defendants, including the Commodity Futures Trading Commission (CFTC), U.S. Attorney General Merrick Garland, the Treasury Department, the Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC).
Binance’s Settlement and Legal Fallout
Binance, the world’s largest cryptocurrency exchange, reached a settlement agreement in November 2023, pleading guilty to violating U.S. sanctions and the International Emergency Economic Powers Act (IEEPA). The company agreed to pay over $4.3 billion in fines and forfeitures.
Former Binance CEO Changpeng Zhao also pled guilty to a felony charge related to violations of the Bank Secrecy Act, paying a $50 million penalty and stepping down as CEO. He was sentenced to four months in jail, with his release scheduled for September 29.
The DOJ launched an investigation into Binance in May 2023 after allegations surfaced that the exchange continued providing services to Russian nationals following U.S. sanctions imposed in April 2022.
Binance Assists in $47.6M Gaming Scam Bust in India
In a separate case, Binance played a crucial role in assisting India’s Enforcement Directorate (ED) in dismantling a $47.6 million gaming scam linked to the Fiewin app. The scam lured victims into online betting and gaming platforms, promising easy returns before seizing their funds.
Binance’s Financial Intelligence Unit (FIU) provided key information that helped track the funds and expose the fraudulent network.
On the same day, Binance introduced a pre-market spot trading service, becoming the first crypto exchange to offer trading of tokens before their official listing on the spot market. However, the service is not available in certain jurisdictions, including the U.S., Canada, Dubai, Japan, and Russia, due to regulatory restrictions.