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Four individuals affected by state-sponsored terrorism have recently filed a lawsuit against the United States Department of Justice (DOJ), demanding that a portion of the $4.3 billion settlement with cryptocurrency exchange Binance be allocated to the Victims of State Sponsored Terrorism Fund.
The suit, lodged on September 25 in a federal court in Washington, D.C., argues that the DOJ has failed to appropriately channel proceeds from Binance’s recent settlement into the fund designated for compensating victims of terrorism.
Alleged Violations by DoJ
According to the plaintiffs, who are either victims themselves or family members of those impacted by acts of terrorism, the DOJ’s actions violate the Victims of State Sponsored Terrorism Act. This law stipulates that 100% of criminal proceeds and 75% of civil proceeds from relevant cases must be deposited into the fund.
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However, the lawsuit claims that the DOJ has only contributed approximately $898.6 million thus far, while indicating intentions to divert at least $1.5 billion to a different fund for crime victims, which the plaintiffs assert is contrary to legal requirements.
Other Regulators Also Face Troubles
The lawsuit is not solely aimed at the DOJ; it also names the Commodity Futures Trading Commission, U.S. Attorney General Merrick Garland, and several departments within the Treasury, including the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC). The plaintiffs are seeking a court order to compel the DOJ to ensure that all proceeds from the Binance case that qualify under the law are deposited into the Victims Fund.
In November 2023, Binance pleaded guilty to multiple violations, including breaching U.S. sanctions and the International Emergency Economic Powers Act (IEEPA). The settlement agreement required the exchange to pay over $4.3 billion in fines and forfeitures.
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Alongside the settlement, former CEO Changpeng Zhao accepted a guilty plea to one felony charge related to violations of the Bank Secrecy Act. He is set to pay a $50 million penalty and step down from his position; Zhao has also served four months in jail and is scheduled for release on September 29.
