A federal judge in Alabama has dismissed a lawsuit accusing Binance entities and Binance.US operator BAM Trading Services of aiding terrorism financing, ruling that the plaintiffs’ complaint failed to meet basic federal pleading standards.
In a 19-page order issued Tuesday, U.S. Magistrate Judge Chad W. Bryan of the Middle District of Alabama determined that the plaintiffs’ amended complaint was legally and factually deficient and described it as a classic example of a “shotgun pleading.” This is a term courts use for complaints that lump defendants together and rely on sprawling allegations without clearly linking specific claims to specific parties.
The lawsuit was brought by victims and relatives of victims of attacks attributed to Hamas and Palestinian Islamic Jihad.
The plaintiffs sought damages from Binance Holdings, former CEO Changpeng Zhao, and BAM Trading Services, the operator of Binance.US, under the Anti-Terrorism Act, the Alien Tort Statute, and common-law negligence theories.
According to the court, the complaint exceeded 100 pages and relied on hundreds of allegations, while repeatedly grouping the defendants without identifying the actions each entity allegedly took. The filing also failed to specify which plaintiffs were asserting particular claims or how the defendants’ conduct allegedly connected to the attacks referenced in the case.
“The First Amended Complaint has been determined to be legally and factually deficient,” the judge wrote, concluding that the pleading failed to satisfy the federal rules requiring a “short and plain statement” of each claim.
Rather than dismissing the case outright, the court ordered the plaintiffs to submit a revised complaint by April 10, 2026. The judge warned that failure to correct the deficiencies could lead to dismissal of the action.
The order instructs the plaintiffs to restructure the complaint to comply with federal pleading rules, including separating legal claims into individual counts and clearly identifying which plaintiffs are bringing each claim against which defendant. The revised filing must also include factual allegations describing the conduct of each defendant and explain how that conduct allegedly connects to the plaintiffs’ injuries.
Parallel case against Binance
The ruling arrives shortly after a federal judge in Manhattan dismissed a separate terrorism-financing lawsuit against Binance brought by hundreds of victims of attacks linked to groups including Hamas and Hezbollah.
In that case, the court found the plaintiffs failed to plausibly connect the exchange’s conduct to the specific attacks that injured them.
The Alabama decision differs in that the court focused primarily on the structure of the complaint rather than the underlying terrorism liability theory. Judge Bryan said the filing forced the court and defendants to search through hundreds of paragraphs of allegations to determine which claims were being asserted and against whom.
The latest ruling comes as Binance continues to face scrutiny tied to alleged illicit finance risks.
The company recently filed a defamation lawsuit against The Wall Street Journal over reporting that it dismantled an internal investigation into crypto flows tied to Iranian networks, allegations the exchange has denied.
© 2026 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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