Binance is hoping that suing The Wall Street Journal for defamation might help shake off a fresh round of government probes into how the cryptocurrency exchange failed to detect $1.7 billion in transfers to a network that was funding Iran-backed terror groups.
The lawsuit comes after a Wall Street Journal investigation, based on conversations with insiders and reviews of internal documents, reported that Binance had quietly dismantled its own investigation into the unlawful transfers and then fired compliance staff who initially flagged them.
Alleging that the report falsely accused Binance of retaliation—among 10 other allegedly false claims—Binance accused the Journal of conducting a “sham” investigation that intentionally disregarded the company’s statements. That included supposedly failing to note that Binance had not closed its investigation into the unlawful transfers.
Binance’s role in the large-scale violation of US sanctions laws is currently being investigated by the Justice and Treasury Departments. Congress members also took notice, including Sen. Richard Blumenthal (D-Conn.), ranking member of the Senate Permanent Subcommittee on Investigations (PSI), who launched an additional inquiry. In a letter to Binance CEO Richard Teng, Blumenthal cited the Journal’s report, as well as reporting from The New York Times and Fortune, while demanding that Binance explain how it managed to overlook the money-laundering for so long and why compliance staff members were fired.
In its complaint Wednesday, Binance claimed that these probes may “be just the tip of the iceberg” if the record is not corrected. The reputational harm is particularly damaging, the exchange noted, since Binance has allegedly worked hard to strengthen its compliance after reaching a settlement with the US government in 2023. In taking that plea deal, Binance admitted to violating anti-money laundering and sanctions laws and paid a $4.3 billion fine, and its founder, Changpeng Zhao, eventually pled guilty to a related charge.
Since that scandal, Binance claimed that the WSJ has “made a business of maligning both the cryptocurrency industry generally and Binance specifically.” That’s why the Journal allegedly rushed to publish its story following a similar New York Times investigation. Alleging that the WSJ was financially motivated to publish a negative story that would get more clicks, Binance claimed the Journal provided little time to respond and then failed to make necessary corrections before and after publication.
Binance explains why it fired compliance staff
Perhaps most relevant to Blumenthal’s investigation, Binance claimed in its lawsuit that “compliance personnel referenced in the Article were not terminated for any reporting or role in the investigations” and “Binance did not shut down the investigation” into suspicious activity. Binance alleged that the WSJ knew prior to publication that:
“Employees departed after Binance uncovered breaches of company data protection and confidentiality policies, rather than because of the investigation: No one was terminated for conducting compliance reviews or raising concerns. Following an internal review, certain employees departed after breaches of company data protection and confidentiality policies were identified. These are serious violations that can result in termination. The actions taken were related to policy breaches, not the subject of any investigation.”
Claiming that WSJ chose to omit this information to serve a profit-fueled agenda, Binance is seeking an order to find the WSJ report defamatory. The company also wants damages, including punitive damages, alleging that the Journal’s reporting was not the result of negligence but due to “actual malice and recklessness.” Absent such relief, a press release provided to Ars said Binance expects to be hit with more “baseless and unnecessary inquiries” from government officials.
The Dow Jones Company, which operates the WSJ, did not immediately respond to Ars’ request to comment.
However, the WSJ will likely stand by its reporting. Binance’s complaint noted that after the exchange sent a retraction letter to WSJ leadership, a Dow Jones lawyer, Ava Lubell, responded, saying that “no correction or clarification is warranted.”
WSJ reports include Binance comments
It also seems worth noting that Binance’s complaint claimed that the Journal made no changes to its report to include statements from the company; however, the report has clearly been edited.
For example, Binance’s lawsuit protests a subheading on the article that said, “Weeks after Trump pardoned Binance’s founder, the company dismantled [the] probe and suspended the investigators.” A current reading of that article, however, shows the subheading now includes a note that “Binance denied inquiry ended or staff fired for the concerns.” An archived version of the article suggests that an update was made on the day the article was published.
Additionally, a subsequent WSJ report, out today—confirming a Justice Department probe into Binance—includes many, if not all, of the statements that Binance accused the Journal of refusing to put on record.
For Binance, the lawsuit seems unlikely to stall government probes, particularly since critics like Blumenthal continue to closely monitor the exchange’s alleged attempts to influence the Trump administration.
After Donald Trump controversially pardoned Binance founder Zhao for his 2023 crypto crimes, the president admitted that “I don’t know who he is.” Alarmed by the pardon, some lawmakers like Blumenthal are concerned that “instead of actually preventing illicit use, Binance has sought to evade accountability and influence the White House through lobbying and a financial partnership with World Liberty Financial (WLFI), the cryptocurrency firm owned by the sons of President Trump and his special envoy Steve Witkoff.”
According to Blumenthal, Binance is now a “vital engine” of Trump’s family business, as “about 85 percent of WLFI’s stablecoins (USD1) are held in Binance accounts.”
To ensure that Binance isn’t using its potential influence to dodge accountability for its role in allowing “the illicit use of cryptocurrencies, including by Iranian and Russian entities, to bypass US sanctions,” Blumenthal is seeking a wide range of records. Despite shedding some light on why Binance claims it fired its compliance staff, Binance’s complaint, which seems to depend on the court making the same inferences from WSJ’s report as the exchange does, most likely will not satisfy the senator’s inquiry.
