Terror Victims Demand Share of Binance’s $4.3B DOJ Settlement

A group of four individuals has filed a lawsuit against the U.S. Department of Justice (DOJ), urging the agency to allocate a larger portion of a $4.3 billion settlement reached with Binance to the U.S. Victims of State Sponsored Terrorism Fund (USVSST).

The plaintiffs in their complaint contend that the U.S. Victims of State Sponsored Terrorism Act, which was established in 2015, mandates that all criminal proceeds and two-thirds of civil proceeds from settlements, like the one involving Binance, be directed toward the victims’ fund.

Legal Confrontation with the DOJ

The four claim that the DOJ has so far contributed just below $900 million to the fund, with reports suggesting that the agency intends to allocate at least $1.5 billion to a separate fund for crime victims.

In their legal document, the plaintiffs argue that this approach contravenes existing law, prompting them to request a court order to guarantee that all appropriate proceeds are allocated correctly.

Over the past nine years, the USVSST fund has provided more than $6 billion in assistance to individuals directly affected by state-sponsored terrorism or their surviving family members.

While the DOJ and Special Master manage the fund, the lawsuit by the four includes a broad list of prominent defendants. This list features the Commodity Futures Trading Commission (CFTC) and U.S. Attorney General Merrick Garland.

Additionally, several agencies within the Treasury Department have been implicated, including the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC).

Binance’s Involvement and Offenses

The funds in question originate from a settlement reached in November 2023 between Binance and various federal entities, following the latter’s admission to multiple charges, which included violations of U.S. sanctions and failing to enforce anti-money laundering measures.

Moreover, the then-CEO of the cryptocurrency exchange, Changpeng Zhao, widely known as CZ, confessed to breaching the Bank Secrecy Act (BSA). He was compelled to resign and was fined $50 million.

A federal court in Seattle, Washington, also sentenced him to four months in prison, most of which he served at the Federal Correctional Institution in Lompoc, California. He is reportedly set to be released on September 27, as his actual release date, September 29, falls on a weekend.

The allegations against Binance and CZ arose from investigations conducted by the Justice Department’s national security and crimes division, which determined that the crypto exchange had permitted Russian nationals to access its services, ignoring sanctions imposed by the United States in light of the ongoing conflict in Ukraine.