A federal judge in Alabama dismissed a terrorism-financing lawsuit against Binance and its U.S. affiliate. The ruling cited structural flaws in the complaint rather than the underlying legal theory.
The case was filed by victims and relatives of victims of attacks attributed to Hamas and Palestinian Islamic Jihad. Plaintiffs sought damages from Binance Holdings, former CEO Changpeng Zhao, and BAM Trading Services under the Anti-Terrorism Act and other statutes.
Chad W. Bryan of the U.S. District Court for the Middle District of Alabama ruled the amended complaint failed to meet federal pleading standards. The court described the filing as a “shotgun pleading,” a legal term for complaints that group defendants together without clearly assigning specific actions.
Can Plaintiffs Rebuild The Case Against Binance?
The complaint spanned more than 100 pages and contained hundreds of allegations. According to the judge, it did not clearly explain which plaintiffs were asserting claims against which defendants or how the alleged conduct connected to specific attacks.
“The First Amended Complaint has been determined to be legally and factually deficient,” Bryan wrote in the order. Federal rules require a “short and plain statement” explaining each claim and the role of each defendant.
Rather than dismissing the case permanently, the court allowed plaintiffs to file a revised complaint by April 10, 2026. The new filing must separate claims into individual counts and detail how each defendant allegedly contributed to the plaintiffs’ injuries.
The ruling arrives during a period of heightened legal scrutiny surrounding crypto exchanges and illicit finance allegations. Earlier this year, another federal court in Manhattan dismissed a separate lawsuit accusing Binance of facilitating terrorist financing tied to attacks involving Hamas and Hezbollah.
In that case, the judge concluded the plaintiffs failed to plausibly link the exchange’s activities to the specific attacks cited in the lawsuit. The Alabama ruling instead focused on the structure and clarity of the complaint itself.
Binance continues to contest multiple allegations tied to illicit finance risks. The exchange recently filed a defamation lawsuit against The Wall Street Journal over reporting related to internal investigations into crypto flows connected to Iranian networks.
The next development will hinge on whether plaintiffs submit a revised complaint that satisfies federal pleading standards before the court’s April deadline.
