Four individuals who are either victims or family members of victims of state-sponsored terrorism have filed a lawsuit against the U.S. Department of Justice (DOJ). Their claim revolves around the DOJ’s handling of a staggering $4.3 billion settlement resulting from the legal troubles of cryptocurrency exchange Binance. The plaintiffs argue that the DOJ is improperly withholding funds that should be directed to a compensation fund for those affected by state-sponsored terrorism.

Background: The Binance Settlement

In November 2023, Binance made headlines when it agreed to a significant settlement after pleading guilty to violating U.S. sanctions and the International Emergency Economic Powers Act (IEEPA). As part of this agreement, Binance committed to paying over $4.3 billion in fines and forfeitures. This penalty was a response to allegations that the exchange facilitated transactions that undermined U.S. sanctions, particularly those related to Russia following its invasion of Ukraine.

The implications of this settlement extend beyond the cryptocurrency exchange itself, as it raises questions about how the funds will be utilized, particularly in relation to victims of terrorism. Former Binance CEO Changpeng Zhao also faced legal repercussions, pleading guilty to a felony charge related to the Bank Secrecy Act. As part of his plea deal, he agreed to a $50 million fine and has stepped down from his position. Zhao was sentenced to four months in jail, with his release expected shortly.

The Lawsuit Against the DOJ

On September 25, the four plaintiffs filed their lawsuit in a federal court in Washington, D.C. They allege that the DOJ has failed to appropriately allocate the proceeds from Binance’s settlement into the Victims of State Sponsored Terrorism Fund. This fund is designed to provide financial support to those impacted by acts of terrorism perpetrated by state actors.

According to the plaintiffs, the law mandates that 100% of criminal proceeds and 75% of civil penalties from such cases should be deposited into the fund. However, the lawsuit claims that the DOJ has so far contributed just over $898.6 million, falling short of what is required under the Victims of State Sponsored Terrorism Act.

What the Plaintiffs Want

The lawsuit seeks a court order that would compel the DOJ to deposit all eligible proceeds from the Binance settlement into the Victims Fund. This demand reflects a broader frustration with how the federal government handles compensation for victims of terrorism. The plaintiffs argue that the DOJ’s current approach not only violates the law but also disregards the needs of those who have suffered due to state-sponsored acts of violence.

In addition to the DOJ, the lawsuit also names several other defendants, including the Commodity Futures Trading Commission (CFTC), U.S. Attorney General Merrick Garland, and various agencies within the Treasury Department. These include the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC). By targeting multiple agencies, the plaintiffs aim to highlight the complexity of the situation and the need for comprehensive accountability.

Why This Matters

The stakes are high for the victims involved in this case. Many of them have experienced profound loss and trauma due to acts of terrorism that were state-sponsored. These funds, which the plaintiffs argue should be funneled directly into the Victims Fund, represent a lifeline for individuals and families trying to rebuild their lives after unimaginable hardship.

The potential diversion of funds to other victim compensation programs raises ethical questions as well. The lawsuit contends that the DOJ’s decision to allocate at least $1.5 billion to a separate fund for crime victims is illegal. This could have significant repercussions, not just for the DOJ but also for the larger framework of victim compensation in the U.S.

Impacts on Binance and the Cryptocurrency Industry

The fallout from Binance’s legal troubles has sent shockwaves through the cryptocurrency industry. As one of the largest exchanges globally, Binance has played a pivotal role in shaping the crypto landscape.

The lawsuit against the DOJ further complicates this narrative. As the cryptocurrency industry continues to grow and evolve, the legal frameworks surrounding it are also being tested. The outcome of this case could set a precedent for how government agencies handle funds from settlements related to cryptocurrency violations and their impact on victims.

Public Reaction and Media Coverage

The public response to the lawsuit has been mixed. Some individuals have expressed solidarity with the plaintiffs, emphasizing the importance of ensuring that victims of terrorism receive the compensation they are entitled to. Others, however, are skeptical about the motives behind the lawsuit, questioning whether the plaintiffs are seeking justice or simply a financial payout.

Media coverage of the case has also highlighted the broader implications of Binance’s legal troubles. As major news outlets report on the lawsuit, the focus is not only on the specifics of the case but also on the role of cryptocurrencies in facilitating or undermining governmental regulations. This has reignited discussions about the future of digital currencies in a rapidly changing legal environment.

The Road Ahead

As the lawsuit unfolds, it will undoubtedly attract further scrutiny from both the media and the public. The plaintiffs’ arguments will likely face rigorous examination in court, as the DOJ and other defendants mount their defense.

For the plaintiffs, the stakes are personal and emotional, as they seek justice not just for themselves but for all victims of state-sponsored terrorism. Their fight could ultimately change how the federal government allocates funds from settlements involving significant financial penalties, especially in the context of supporting victims of terrorism.

Conclusion

The lawsuit filed by victims of state-sponsored terrorism against the DOJ raises important questions about justice, compensation, and accountability. As the legal proceedings progress, all eyes will be on how this case unfolds and what it means for both the plaintiffs and the broader landscape of victim support in the United States. The outcome could not only affect the plaintiffs directly but also reshape policies regarding the allocation of funds from significant settlements in the future.

For now, the fight continues as these victims seek to ensure that they receive the support and compensation they deserve in the aftermath of their tragic experiences. The case underscores the necessity of a robust framework for compensating victims of state-sponsored terrorism and highlights the role that legal battles play in shaping this framework.