A presidential pardon for its founder and a massive new lawsuit have placed cryptocurrency exchange Binance in a severe legal and reputational storm, raising urgent questions about its compliance model and the potential consequences for the wider digital asset industry.
A Landmark Lawsuit and a Controversial Pardon
Binance is facing a monumental legal challenge. On November 24, 2025, families of more than 300 U.S. citizens killed, injured, or taken hostage in the October 7, 2023, Hamas attacks in Israel filed a lawsuit against the exchange. The plaintiffs allege Binance “knowingly, willfully, and systematically assisted” terrorist groups, including Hamas, Hezbollah, and Palestinian Islamic Jihad, by facilitating the transfer of more than $1 billion through its platform. The lawsuit claims that Binance’s design as a refuge for illicit activity was a core part of its business model, with one of its former compliance officers allegedly stating, “we see the bad, but we close 2 eyes”.
This new civil suit comes just weeks after a seismic political event: President Donald Trump’s October 23 pardon of Binance founder Changpeng “CZ” Zhao. Zhao had pleaded guilty in 2023 to failing to maintain an effective anti-money laundering program and served a four-month prison sentence. The pardon, which Trump claimed was to correct a “Biden witch hunt”, has drawn intense scrutiny due to financial links between Binance and a Trump family-linked crypto venture, World Liberty Financial. Former U.S. Pardon Attorney Elizabeth Oyer condemned the move, stating, “This is absolutely not justice. This is corruption”.
A Pattern of Conduct and Deepening Risks
The current lawsuit asserts that Binance’s misconduct is “far more serious and pervasive” than what was previously disclosed by the U.S. government. This is not the company’s first major legal battle. In November 2023, Binance admitted to charges of money laundering and sanctions violations in a settlement with the Department of Justice that included penalties exceeding $4 billion. At the time, Treasury Secretary Janet Yellen stated that Binance’s “willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform”.
Disturbingly, evidence suggests problematic transactions continued even after this historic settlement. An analysis by the International Consortium of Investigative Journalists (ICIJ) found that after its guilty plea and while under court supervision, Binance still profited from hundreds of millions of dollars in cryptocurrency linked to global organized crime groups. This pattern indicates deep-rooted compliance issues that a massive fine and a monitorship have yet to resolve.
Mounting Scrutiny and an Uncertain Future
The combination of the presidential pardon and the new terrorism-financing lawsuit creates a high-stakes environment for Binance. The company faces operational risks from ongoing litigation and regulatory investigations in multiple countries. For institutional players and users with exposure to the platform, this situation underscores the critical importance of robust due diligence.
Binance has stated it “complies fully with internationally recognised sanctions laws” and has improved its compliance systems. However, the plaintiffs in the new lawsuit contend that “to this day, there is no indication that Binance has meaningfully altered its core business model”. The outcome of this case, along with continued political and regulatory scrutiny, will not only determine Binance’s future but also serve as a defining test for accountability and compliance standards across the entire cryptocurrency landscape.