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Reuters slams Binance for $2.35 billion money laundering issue

Key points to remember

  • A new report from Reuters claims that Binance allowed more than $2.35 billion in criminal funds to be processed through its exchange without scrutiny.
  • Entities suspected of laundering money through Binance include a North Korean hacking syndicate and the world’s former largest darknet drug market.
  • Binance would have been an easy exchange to launder money due to its previously lax KYC requirements.

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A Reuters report claims that Binance enabled over $2.35 billion to be laundered over a five-year period. The report highlighted instances where North Korean hackers, Russian drug traffickers and European organized crime groups allegedly transacted money through the exchange.

State Pirates, Drug Dealers and Organized Crime

Binance, one of the world’s largest cryptocurrency exchanges, may have leaked billions of dollars in hacked funds through its platform, according to a new investigative report from Reuters.

According to report, Binance reportedly processed over $2.35 billion in stolen funds between 2017 and 2021. The funds (the total of which was calculated from court records, law enforcement statements, and with the help of blockchain analytics) are believed to come from on-chain hacks, investment frauds, and illegal drug sales. Blockchain research firm Chainalysis has declared that Binance processed $770 million in criminal funds in 2019 alone.

Reuters report identifies entities that allegedly laundered money through Binance, including Lazarus Group, the North Korean cybercrime syndicate responsible for piracy $550 million from the Ronin Bridge last year. While Binance worked with law enforcement to identify and freeze $5 million from the hack, the amount that managed to pass through the exchange is unclear.

Hydra, a giant Russian-language darknet marketplace that used cryptocurrencies to sell and buy drugs, also reportedly used Binance to process more than $780 million since early 2018.

The report finally details that European organized crime groups targeted pensioners in Germany, Austria and Spain, and possibly laundered more than $800 million in fake earnings from trading websites via cryptocurrency exchanges. , especially Binance.

Binance was the cryptocurrency exchange of choice, according to the report, due to its previously loose know-your-customer (KYC) identity verification checks. Indeed, traffic between Binance and Hydra dropped sharply after the tightening of KYC requirements in August 2021.

When asked to comment on the Reuters investigation, a Binance spokesperson said Crypto Briefing that “the article uses outdated information from 2019 and unverified personal attestations as a crutch to establish a false narrative” before highlighting Binance’s cooperation with law enforcement in multiple cybercrime investigations.

Disclosure: At the time of writing this article, the author of this article owned ETH and several other cryptocurrencies.

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