A recent decision from the U.S. District Court for the Southern District of New York shows that crypto and other financial services platforms aren’t off the hook when it comes to the United States Anti-Terrorism Act (ATA). On February 25, Judge John G. Koeltl ordered Binance Holdings Limited (Binance) to go through jurisdictional discovery and denied its motion to dismiss aiding and abetting claims under the ATA. See Raanan v. Binance Holdings Ltd., 2025 WL 605594 (S.D.N.Y. Feb. 25, 2025). While the court dismissed the primary liability claims against Binance, this decision highlights the need for proper internal controls and adherence to anti-money laundering (AML) and know your customer (KYC) regulations for companies in this sector. In short, the Binance decision highlights the risks of anti-terrorism litigation in the U.S. for companies whose financial services and products, especially in crypto trading, might be used by bad actors.
Background: Raanan v. Binance Holdings
The Raanan case was brought by 40 victims (or their representatives) of the October 7, 2023 attacks in Israel perpetrated by Hamas and the Palestine Islamic Jihad (PIJ). The plaintiffs claimed that Hamas and PIJ used Binance’s platform to fund their terrorist activities. They argued that Binance knew, or at least ignored, that Hamas and PIJ were using Binance’s services, and that Binance’s failure to implement necessary controls allowed Hamas and PIJ to finance their terrorist activities.
The plaintiffs also sued Changpeng Zhao, Binance’s founder and former CEO. Last April, Zhao was sentenced to four months in prison for violating sanctions and AML laws. Binance also was fined over $4 billion, one of the largest corporate penalties in U.S. history, for allowing “money to flow to terrorists, cybercriminals, and child abusers through its platform.” The plaintiffs used these prior proceedings to support their claim that Binance knew or recklessly disregarded that Foreign Terrorist Organizations (FTOs) used its platform.
Key Rulings
Personal Jurisdiction
Binance and Zhao tried to dismiss the case for lack of personal jurisdiction, arguing that Binance is registered in the Cayman Islands and doesn’t have a corporate headquarters. They acknowledged doing business in New York but argued that the plaintiffs didn’t tie that business to their claims. The plaintiffs, however, argued that Binance’s provision of financial services to Hamas and PIJ depended on transactions with certain VIP customers in New York, who provided necessary liquidity to the platform.
The court found that the plaintiffs’ contentions were not supported by specific facts in the complaint and that the alleged relationship between certain New York contacts “and the plaintiffs’ claims is not apparent from the complaint’s allegations.” Reasoning that the plaintiffs had made a “sufficient start” toward establishing personal jurisdiction, however, the court allowed limited jurisdictional discovery. The parties are to submit a joint status report on March 11, 2025, with their views on the appropriate scope of this discovery.
Failure to State a Claim under the ATA and JASTA
Primary Liability
The plaintiffs claimed that Binance carried out an act of international terrorism by allowing Hamas and PIJ to use its platform. They argued that Hamas, PIJ, and other groups have used cryptocurrency to fund terrorist attacks since at least 2019 and that that Binance’s conduct in facilitating those transactions was the equivalent of making direct donations to FTOs.
The court rejected this claim, stating that the plaintiffs didn’t sufficiently allege that Binance itself committed acts dangerous to human life. The court also found that the complaint didn’t allege that Binance’s services proximately caused the plaintiffs’ injuries because the plaintiffs did not show that Binance directly funded the attacks.
Aiding-and-Abetting Liability
The court allowed the aiding-and-abetting claims to proceed, finding that the plaintiffs sufficiently alleged that Binance was generally aware of its role in Hamas’s and PIJ’s activities and provided knowing and substantial assistance to Hamas and PIJ. The court noted that Binance allegedly maintained inadequate internal controls and intentionally circumvented anti-terror financing regulations. The court also observed that a Financial Crimes Enforcement Network investigation had allegedly revealed that Binance received reports in April 2019 and July 2020 that Hamas was operating on its platform.
The court further rejected Binance’s argument that its passive inaction was akin to that found insufficient by the Supreme Court in Twitter, Inc. v. Taamneh, 598 U.S. 471 (2023), because—unlike the social media operators in Twitter—Binance had an independent duty to act under various “United States laws and regulations [that] required Binance to implement robust anti-money laundering programs, perform due diligence on its customers, and file SARs with regulators flagging suspected illicit activity, all to prevent terrorists from accessing the United States financial system through the Binance exchange.” The court concluded that the plaintiffs’ allegations captured the essence of aiding-and-abetting liability, which requires conscious and culpable participation.
Takeaways
The Raanan decision highlights that crypto companies must be aware of potential ATA liability, even if they don’t have a clear U.S. presence. Plaintiffs are developing new strategies to extend the potential reach of the ATA, and this ruling could have broader implications for the crypto industry. Companies in emerging financial sectors, especially those dealing with cryptocurrencies, should understand that courts considering ATA claims are likely to focus on whether their compliance and internal control programs are effective at identifying bad actors.
The decision also underscores the jurisdictional risks of operating in the U.S. market, as U.S. courts can assert jurisdiction over foreign entities.
As regulators and courts continue to scrutinize the use of cryptocurrency and new financial services, companies in this space should be aware of the potential liability that may be associated with their practices and internal controls.
