Four victims or family members of victims of state-sponsored terrorism have filed a lawsuit against the U.S. Department of Justice (DOJ), claiming the agency is improperly withholding or delaying the distribution of funds from Binance’s $4.3 billion settlement. The lawsuit was filed on September 25 in a federal court in Washington, D.C.
The plaintiffs allege that the DOJ has failed to deposit the proceeds into the Victims of State Sponsored Terrorism Fund, as required by law. According to the Victims of State Sponsored Terrorism Act, 100% of criminal proceeds and 75% of civil proceeds from relevant cases should be allocated to the fund, which aims to compensate victims of state-sponsored terrorism. However, the DOJ has reportedly deposited only $898.6 million into the fund thus far.
While the DOJ has expressed its intention to direct at least $1.5 billion into a fund for crime victims, the plaintiffs argue that this action violates the law. They are seeking a court order to compel the DOJ to deposit all qualifying proceeds from the Binance settlement into the Victims Fund.
The lawsuit also names several other defendants, including the Commodity Futures Trading Commission (CFTC), U.S. Attorney General Merrick Garland, and various Treasury Department agencies, such as the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC).
In November 2023, Binance, the world’s largest cryptocurrency exchange, pled guilty to violating U.S. sanctions and the International Emergency Economic Powers Act (IEEPA), agreeing to pay over $4.3 billion in fines and forfeitures. Former CEO Changpeng Zhao also pled guilty to a felony charge related to violations of the Bank Secrecy Act, resulting in a $50 million penalty and a four-month jail sentence, with his release scheduled for September 29.
The DOJ had launched an investigation into Binance in May 2023, focusing on the company’s alleged provision of services to Russians after sanctions were imposed in April 2022.
In related news, Binance recently announced its role in helping India’s Enforcement Directorate dismantle a $47.6 million gaming scam linked to the Fiewin app. The exchange’s Financial Intelligence Unit provided critical information that helped trace the funds and expose the fraudulent network.
Additionally, Binance introduced a new pre-market spot trading service, allowing users to trade actual tokens before their official listing on the spot market. However, this service is not available in certain jurisdictions, including the U.S., Canada, Dubai, Japan, the Netherlands, Russia, and Spain, due to regulatory restrictions.
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