Is Binance a Hub for Fraudulent Activities?

  • Binance is one of the most successful crypto exchanges, but there are concerns over how it has become an easy spot for money launderers and other bad actors.

Binance is easily one of the biggest crypto exchanges with a wide network of users. However, over the last five years, some of the biggest crimes and hacks in the crypto world have taken place on the platform. The North Korean hacker group Lazarus, raided a Slovakian exchange in September 2020, stealing tokens worth $5.4 million. The hack was one of the many operations carried out by the outfit to fund North Korea’s nuclear weapon agenda. The hackers used Binance to convert and hide the stolen funds.

However, Binance claimed it had no knowledge of the illegal activity. But, that was one of the many times funds from hackers, drug dealers, and fraudsters flowed through the exchange. A report by Reuters details how Binance had no idea about who was moving funds into their exchange and failed to spot and detect possible fraudulent transactions.

According to Reuters, over the last few years, Binance has processed transactions worth about $2.35 billion, coming from investment fraud, illegal drug purchases, and hacks. A Chainalysis report showed that in 2019 alone and more than any other crypto exchange, Binance had received illegal cash worth $770 million. Binance, however, claimed the figure was incorrect but refused to provide any official figure.

Despite warnings made by several officials, Binance reportedly maintained lax money-laundering checks on its customers until mid-2021. Binance executes cryptocurrency deals worth hundreds of billions of dollars each month for its approximately 120 million users globally. Illicit money only represents a small percentage of its trading volumes. However, cybercriminals found the exchange to be an easy spot to move their loot.

According to Reuters, data provided by Amsterdam-based analysis company, Crystal Blockchain, revealed that from 2017 to 2022, sellers and buyers on one of the largest darknet drug markets, Hydra, used Binance to send and receive crypto payments worth $780 million. 

For the past five years, Monero, a cryptocurrency that provides users with privacy, has been traded on the Binance platform by traders. Bitcoin transactions are viewable on a public blockchain, whereas Monero masks the sender and recipient’s digital addresses. Binance users appeared to like Monero, and it was one of the most in-demand coins on the exchange.

The anonymity that Monero provides makes it a potential weapon for money launderers, according to law enforcement organizations in Europe and the US. Authorities across the world are concerned that such coins will enable bad players to easily mask their activities and evade justice. According to Reuters, many people confirmed buying Monero in order to purchase illegal drugs.

The big question has been on Binance’s previous measures in preventing money laundering and fraud. The crypto exchange claims to have improved its security measures but there are concerns that it might continue to be a hub for bad players.

Lawrence Woriji Verified

Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.

Latest News