A U.S. federal court in Alabama has dismissed a lawsuit accusing cryptocurrency exchange Binance, its former CEO Changpeng Zhao, and its U.S. affiliate BAM Trading Services of violating the Anti-Terrorism Act (ATA) by allegedly facilitating transactions that supported terrorist groups. The plaintiffs, victims and relatives of victims of attacks attributed to Hamas and Palestinian Islamic Jihad, sought damages under the ATA, the Alien Tort Statute, and common law negligence claims.
In a 19-page order issued on March 12, 2026, U.S. Magistrate Judge Chad W. Bryan of the Middle District of Alabama ruled the complaint was a legally and factually deficient "shotgun pleading." The court found the filing, which exceeded 100 pages and contained hundreds of allegations, improperly grouped defendants together without clearly linking specific actions to each party or connecting the alleged conduct to the injuries claimed.
The judge determined the complaint failed to meet basic federal pleading standards, which require a "short and plain statement" of claims. Rather than dismissing the case outright, the court granted the plaintiffs an opportunity to amend their complaint by April 10, 2026. The order instructs them to restructure the filing into separate counts, clearly identify which plaintiffs are asserting claims against which defendants, and provide specific factual allegations tying each defendant's conduct to the attacks.
The ruling warns that failure to correct these deficiencies could lead to the lawsuit being terminated entirely. This decision follows a similar legal setback for plaintiffs in a separate ATA case against Binance, which was dismissed by a federal court in Manhattan. The Manhattan court ruled the plaintiffs failed to plausibly connect Binance's operations to specific terrorist attacks, while the Alabama ruling focused on procedural shortcomings.
Despite this procedural victory for Binance, the exchange continues to face broader legal and regulatory scrutiny over alleged illicit finance risks. The company recently filed a defamation lawsuit against The Wall Street Journal over reporting related to internal investigations of crypto flows tied to Iranian networks.
