Binance facilitated at least $2.35 billion in transactions from illicit sources between 2017 and 2022, according to a Reuters report.
The investigative report claims that billions of dollars worth of cryptocurrency from hacks, investment fraud, and illegal drug sales have passed through Binance over the past five years. In one case, users of the Russian-language site Hydra, a darknet drug market, processed transactions through Binance for a total of $780 million, between 2017 and 2022.
The total figure is based on statements from law enforcement around the globe, an examination of court records, and an analysis of blockchain data, most of which were provided by Amsterdam-based analysis firm Crystal Blockchain. Reuters also reviewed Binance client transactions on darknet sites. The data also included crypto that had passed through several digital wallets before reaching Binance, the “indirect” flows being a red flag for money laundering according to the Financial Action Task Force.
The article also quoted crypto researcher Chainalysis, who said in a 2020 report that Binance received $770 million in illicit funds in 2019 alone. However, the article also acknowledged that the amount of illicitly sourced crypto passing through Binance represented a small portion of the world’s largest exchange’s overall trading volumes.
Lazarus hack
The article featured a prominent case, when Slovakian crypto exchange Eterbase was infiltrated by North Korean hacking group Lazarus in September 2020. After stealing $5.4 million in crypto, the hackers opened multiple anonymous accounts on Binance several hours later using only encrypted email addresses as identification, then proceeded to convert the stolen funds and obscure their trail.
These transactions were confirmed by records that Binance had shared with the Slovak National Police. Ultimately, Eterbase was unable to locate and recover the funds. According to Eterbase co-founder Robert Auxt, “Binance had no idea who was moving money through their exchange.”
Binance response
While Binance CEO Changpeng Zhao was unavailable to comment, Chief Communications Officer Patrick Hillmann responded to written questions posed by Reuters. While stating that Binance did not consider the estimate to be accurate, he neglected to provide any figures to counter the accusation, despite a request for data about the cases identified in the article.
According to Hillmann, Binance is building “the most sophisticated cybercrime team on the planet,” while working to “further improve our ability to detect illegal cryptographic activity on our platform.” Currently, Binance monitors transactions and uses risk assessments to “ensure that all illegal funds are tracked, frozen, recovered, and/or returned to their rightful owner,” Hillmann said.
Earlier this year, another Reuters investigative article accused Binance of sharing users’ personal data with Russian authorities, potentially putting them at risk of reprisals. Binance responded with a lengthy statement, claiming the article represented a “false narrative.”
