Home NFTs Crypto Exchange Binance Addresses Allegations Of $2.3B In Money Laundering

Crypto Exchange Binance Addresses Allegations Of $2.3B In Money Laundering


Major crypto exchange Binance replied to a report published by media outlet Reuters. The controversial report claims Binance has been key to allegedly support illicit activity around the world, failed to provide assistance to authorities to prevent money laundering cases, and failed at imposing a robust Know Your Customer (KYC) policy.

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In a post titled “Crypto and Money Laundering: An Inconvenient Truth”, the exchange defends itself against these accusations. Reuters claims the platform is a “hub” for illegal activity which has processed over $2.3 billion from illicit funds.

This was allegedly possible due to the possibility of opening an account and moving funds on Binance with an email address alone. Reuters said that the platform allowed users to operate with little to no-KYC requirements until August 2021.

During this time, the Reuters reports claim there is a correlation between the amount of money flowing through the exchange from malicious actors. The exchange fought back by highlighting two important facts: crypto constitutes less than 0.9% of annual global money laundering and they have the tools to stop it.

The exchange said:

Binance has the world’s most sophisticated anti-money laundering systems and employs the most experienced anti-money laundering investigators not only in crypto but in the world (…). So, unlike laundering of cash through banks, crypto money laundering is not difficult to identify and disrupt.

The platform claims it has spent “tens of millions of dollars” building a “sophisticated” cyber forensics team. Comprised of experts from the U.S. Federal Bureau of Investigation (FBI), the U.S. Secret Service, the European Police (Europol), and others.

In that sense, Binance said it is actively working with law enforcement. Their cooperation has enabled authorities to take down Hydra, a Russian-based platform for the illegal distribution of drugs, and to fight the North Korean-backed hacker group, Lazarus.

Is Crypto Exchange Binance Enabling Money Laundering?

In its reply, Binance goes into more detail about Lazarus and Hydra. The Reuters report claims that both of these criminal organizations used Binance to allegedly send illegal funds, launder them, and to support their operations.

Lazarus was the hacker group accused of stealing over $600 million from the Axie Infinity bridge Ronin. A portion of these funds was sent to Binance. The exchange claims it froze over $5 million of these funds.

Furthermore, Binance says it is the most aggressive exchange at stopping groups such as Lazarus from using its platform. The company said it worked with on-chain analytics firm Chainalysis to freeze the funds, and that its team members provided information that:

(…) led to the identification of the group (Lazarus) and the tracing of the funds from the $250 million theft from an exchange (…). We actively work with numerous Law Enforcement agencies to target North Korean campaigns by sharing intelligence, proactively freezing accounts and shutting down their networks before they can successfully escape with stolen funds.

On the Russian drug platform Hydra, the accusations are worse. The report claims quotes users who claimed Binance was the “fastest and cheapest way” to pay drug dealers.

As seen in the chart below, Reuters links Binance’s expansion into Russia with an increase in darknet dealings. At the same time, it claims these deals dropped in August 2021, when the platform imposed a rigorous KYC policy.

Crypto Binance
Source: Reuters

However, this increase in darknet dealings also coincides with the beginning of the COVID-19 pandemic. Hydra was eventually taken down, Binance claims it played an important role in this investigation.

Unlike the traditional finance system, crypto and blockchain technology can be a tool for authorities looking to track down and stop malicious actors. Binance said:

Without crypto, the Hydra case would very likely never have been solved. The ability to trace the flow of funds to identify where the market was hosted is the reason the case is closed. (…) Binance believes it has taken more action against Russian money-laundering operations than any other crypto exchange.

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At the time of writing, Bitcoin (BTC) trades at $31,300 with a 5% profit in the last 24-hours.

Crypto Binance Bitcoin BTC BTCUSD
BTC moving sideways on the 4-hour chart. Source: BTCUSD Tradingview

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