preferred on
Points of Focus
- The Eleventh Circuit is letting crypto theft victims sue Binance in federal court.
- One victim traced 629,753 USDT, 27.47 BTC, and 16.37 ETH.
- Binance faces the case against a backdrop of global AML penalties.
Binance has lost an unusual US appeals court fight that could allow a group of crypto theft victims to pursue the world’s largest exchange in federal court rather than being forced into arbitration under terms they say they never accepted.
The US Court of Appeals for the Eleventh Circuit granted a petition for a writ of mandamus in In re Philip Martin, et al., No. 26-11695, on Aug. 19, directing a Florida federal judge to vacate an order that had compelled the plaintiffs to arbitrate their claims against Binance.
The procedural victory is significant because mandamus is an extraordinary remedy, and orders sending cases to arbitration generally cannot be immediately appealed. The ruling does not find Binance liable for the stolen crypto. Instead, it allows the plaintiffs’ underlying allegations to return to court.
David vs. Goliath. Today, David won.
We're a small firm. @binance is the largest crypto exchange in the world.
Our clients are innocent victims of crypto theft. Criminals drained their accounts, ran the money through @binance, and cashed out. Lives upended.
Then they got…
— David Silver (@dcsilver) August 20, 2026
Victims never held Binance accounts
At the center of the dispute is an unusual question: Can someone be bound by an exchange’s terms when they were never a customer?
The plaintiffs allege hackers stole cryptocurrency from accounts they held on other platforms before routing the assets through Binance accounts and withdrawing them.
Attorney David Silver, whose firm Silver Miller represents the plaintiffs alongside Keller Rohrback, Robbins Geller Rudman & Dowd, and Herman Jones, said one client had roughly $1.5 million in crypto stolen from a Coinbase account beginning Aug. 8, 2022.
According to the plaintiffs’ forensic analysis, 629,753 USDt (USDT), 27.47 Bitcoin (BTC), and 16.37 Ether (ETH) from that theft entered Binance accounts. The assets would be worth $2.4 million at current prices, Silver said.
Those claims remain allegations and have not been decided on their merits.
The plaintiffs allege Binance’s historical Know Your Customer (KYC) and Anti-Money Laundering (AML) controls allowed criminals to use the exchange as an exit point for stolen assets. Their complaints include claims for conversion, aiding and abetting conversion, and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO).
Binance had successfully moved the dispute out of court in March. US District Judge Rodolfo Ruiz ruled that the plaintiffs could be bound under equitable estoppel, despite never opening Binance accounts, because he found their claims sufficiently connected to Binance’s Terms of Use.
The Eleventh Circuit disagreed. According to the appellate ruling, the plaintiffs’ claims rest on duties allegedly imposed by law rather than contractual rights created by Binance’s customer agreement. That undercut the basis for applying Binance customers’ arbitration agreement to people who never accepted it.
Binance’s own US AML history now looms over the lawsuit
The plaintiffs’ allegations land on particularly sensitive ground because Binance has already admitted serious US AML failures.
In November 2023, Binance pleaded guilty to violating the Bank Secrecy Act, operating an unlicensed money-transmitting business, and violating US sanctions law. The company agreed to $4.316 billion in penalties and forfeiture.
The Department of Justice (DOJ) said Binance had deliberately operated without required controls and processed nearly $900 million in transactions between US users and users in Iran. The DOJ also said the exchange was required to retrospectively review transactions and file previously missing suspicious activity reports.
Those criminal admissions do not establish liability in the Martin lawsuit, which concerns separate victims and transactions. But they give plaintiffs a documented compliance history to point to as they attempt to prove their own allegations.
Binance founder Changpeng Zhao separately pleaded guilty to failing to maintain an effective AML program. He stepped down as CEO, paid a $50-million criminal fine, and served nearly four months in federal prison in 2024. President Donald Trump pardoned Zhao in October 2025.
Regulatory problems extend beyond the US
Binance’s compliance problems have not been limited to America.
French prosecutors opened a judicial investigation in 2025 covering alleged aggravated money laundering, tax-fraud laundering, and unauthorized crypto services between 2019 and 2024. Binance denied the allegations.
Canada’s FINTRAC separately imposed a 6-million-CAD penalty after finding Binance failed to register and failed to report 5,902 large virtual-currency transactions. Binance appealed the decision.
Australia has also tightened pressure. In March, a federal court ordered Binance’s Australian derivatives business to pay 10 million Australian dollars after more than 85% of its clients were allegedly misclassified, while AUSTRAC has separately required an independent review of the local operation’s AML controls.
Europe delivered another setback this summer. Binance withdrew its Greek application for authorization under the EU’s Markets in Crypto-Assets Regulation (MiCA) days before the June 30 deadline after reports that approval was unlikely. The exchange consequently suspended crypto services across affected EU markets while saying it would seek authorization elsewhere.
The Eleventh Circuit ruling adds a different kind of risk. Regulators have already extracted billions from Binance over its past compliance failures. Now private victims who say those same failures helped thieves move stolen crypto have cleared a major procedural barrier to putting their allegations before a US court.
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