- Four victims or family members of victims have accused the DOJ of withholding funds from the Binance settlement.
- The settlement was $4.3 billion and the DOJ was supposed to allocate the entire money to the Victims of State Sponsored Terrorism Fund.
- However, the DOJ has only transferred $898.6 million so far.
Four people who are victims or family members of victims of state-sponsored terrorism have sued the US Department of Justice (DOJ) for apparently withholding the settlement money.
The lawsuit was filed on September 25 in a Washington, D.C. federal court. It said that in November last year, Binance (the company responsible for the loss of these users) issued a $4.3 billion settlement.
According to the rules, 100% of this money should have been transferred to the Victims of State Sponsored Terrorism Fund which would then be transferred to the affected users. However, according to the lawsuit, only $898.6 million has been deposited so far.
Other than the DOJ, the following parties have also been named as the defendants:
- The Commodity Futures Trading Commission (CFTC)
- U.S. Attorney General Merrick Garland
- The Treasury Department, and its agencies, including the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC).
What Does the DOJ Have to Say About This?
The DOJ has not addressed the lawsuit yet. However, it had previously said that it intends to deposit $1.5 million, which is against the rules.
The Victims of State Sponsored Terrorism Act states in case of criminal proceeds, 100% of the settlement money has to be allocated to the fund. If for civil proceeds, 75% of the money should go to the victim’s fund.
The Binance case has been categorized as criminal. This means the DOJ needs to transfer the entire $4.3 billion settlement. This is what the lawsuit is trying to achieve.
About the Binance Case
Binance and its CEO Changpeng Zhao were accused of money laundering, violating the Bank Secrecy Act, and violating US sanctions (it was providing services to Russia despite US sanctions) and the International Emergency Economic Powers Act in November 2023.
The company accepted all these charges and that’s when the $4.3 billion settlement was finalized.
In addition to that, Zhao was personally fined $50 million for violating the Bank Secrecy Act. He also had to step down as the CEO and was sentenced to 4 months in prison. He is set to be released on September 29.
The company has been under suspicion since 2018. By December 2020, the matter had escalated when the Federal prosecutors asked for access to internal documents, including those on anti-money laundering initiatives, and correspondence between Zhao and others.
Then in March 2023, the CFTC brought civil proceedings against the company for failing to implement an anti-money laundering initiative that could have put an end to dirty money transfers. CFTC officers mentioned that Binance employees were aware of all the illicit activities going on there such as the financing of terrorism and illicit drug sales.
Then in June 2023, the Securities and Exchange Commission (SEC) also sued the company and by November, the DOJ had filed criminal charges against it.
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