2017 to 2021, criminals laundered at least $2.35 billion in illicit funds through the cryptocurrency exchange Binance, Reuters analysts found.
During the investigation, experts reviewed court records, law enforcement statements, and data from blockchain analytics companies. According to the findings, funds from hacking, investment fraud and drug sales were laundered through the platform.
From 2017 to 2022, buyers and sellers of darknet marketplace Hydra used Binance to conduct $780 million in cryptocurrency transactions.
According to Chainalysis, in 2019 alone, the exchange received a total of $770 million in miscreant funds, beating all platforms in this regard.
German law enforcement officials reported that Binance was used to launder some of the proceeds of fraudulent schemes in 2020, causing victims to lose a total of €750 million.
North Korean hackers Lazarus sent some of the funds from hacks of the Slovak exchange Eterbase and the sideline Ronin to Binance.
Reuters noted that the exchange had weak AML procedures until mid-2021.
According to media reports, hackers opened at least 20 anonymous accounts on Binance in 2020 hours after Eterbase was hacked, allowing them to convert stolen funds and “hide their money trail.”
Hydra-related cryptocurrency transactions passing through Binance dropped sharply after the exchange tightened its customer verification procedures in August 2021, the researchers pointed out.
At the same time, Reuters noted that the share of “dirty” cryptocurrencies passed through Binance is only a small fraction of the exchange’s total trading volume.
Binance Communications Director Patrick Hillmann called the calculations presented in the article inaccurate.
He also stated that the exchange monitors transactions and risk assessments to “ensure that any illegal funds are traced, frozen, recovered and/or returned to their rightful owner.
In response to the investigation, the exchange also republished a blog post stating that, contrary to popular belief, cryptocurrencies are not the main method for criminals to launder funds.
The post appeared on Binance before the Reuters investigation was published.
The post does not directly mention Reuters, but refers to a certain journalist who allegedly “has evidence that Binance allowed about $2.5 billion to be laundered between 2017 and 2022.”
The exchange noted that it is “much easier to open a bank account with fake documents at a small regional bank” than to use cryptocurrencies to launder funds.
Binance stressed that cryptocurrency platforms apply strict KYC procedures, large transactions cannot be made undetected and can easily be traced via blockchain.
The company also said it cooperated with law enforcement, used “the most sophisticated systems” to combat money laundering, and worked with a large team of cyber forensics experts.
Binance noted that in the case of the Ronin hack, most of the stolen funds ended up on other exchanges and went through the Ethereum mixer Tornado Cash.
In cooperation with law enforcement and analysts, Binance froze about $5.8 million in assets related to the hack.
The exchange also mentioned the Eterbase hack with dozens of anonymous accounts opened on the crypto platform by Lazarus hackers.
The company said it cooperated with Slovakian authorities, during which Binance identified such accounts on its site as well as on other exchanges.
The statement also said it indirectly used “every major exchange” to conduct cryptocurrency transactions related to the Hydra marketplace.
At the same time, Binance noted that it was the traceability of crypto-assets that contributed to the investigation of the darknet marketplace.”
This is an ‘inconvenient truth’ for those opposed to cryptocurrencies – the vast majority of all money laundered goes through the traditional banking system, not cryptoassets,” Binance summed up.