Media reports allege Binance laundered nearly $2.4 billion; exchange denies the allegations

Between 2017 and 2021, criminals laundered through the Binance cryptocurrency exchange at least $2.35 billion of illicit funds, according to Reuters.

The investigation examined court records, law-enforcement statements and data from firms that analyse blockchain activity. According to the findings, funds obtained from hacks, investment fraud and drug sales were laundered through the platform.

Key figures:

• Between 2017 and 2022, Hydra dark-web marketplace buyers and sellers used Binance for cryptocurrency operations totaling $780 million;
• According to Chainalysis, in 2019 alone illicit funds reached the exchange totaling $770 million, ahead of all other platforms;
• German authorities said that in 2020 Binance was used to launder part of the proceeds from fraudulent schemes, resulting in victims losing a total of €750 million;
• North Korean Lazarus hackers sent a portion of the funds from hacks of the Slovak exchange Eterbase and the Ronin sidechain.

Reuters noted that until mid-2021 the exchange had weak AML procedures.

According to media reports, in 2020, hours after the Eterbase hack, hackers opened at least 20 anonymous accounts on Binance, enabling them to convert stolen funds and “cover the money trail.”

Hydra-related cryptocurrency transactions passing through Binance sharply declined after the exchange tightened customer verification procedures in August 2021, researchers noted.

At the same time, Reuters noted that the share of “dirty” cryptocurrencies passing through Binance represented only a small portion of the exchange’s total trading volume.

Binance’s Chief Communications Officer Patrick Hillmann called the figures reported in the article inaccurate. He also said the exchange monitors transactions and assesses risks to “guarantee that any illicit funds will be 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 primary method for criminals to launder funds. The post appeared on Binance before Reuters published the investigation.

In the post, there is no direct mention of Reuters, but there is a reference to a journalist who allegedly “has evidence that Binance allowed laundering of about $2.5 billion from 2017 to 2022.”

The exchange noted that laundering funds is far easier by opening a bank account with fake documents at a small regional bank than by using cryptocurrencies.

Binance emphasised that crypto platforms employ strict KYC procedures; large transactions cannot go unnoticed and are easily traceable via the blockchain.

The company also said it cooperates with law enforcement, uses “the most advanced systems” to combat money laundering and works with a large team of cybercrime investigators.

Binance noted that in the Ronin breach, most of the stolen funds ended up on other exchanges and passed through the Ethereum mixer Tornado Cash. In cooperation with law enforcement and analysts, Binance frozen assets linked to the breach totaling around $5.8 million.

The exchange also mentioned the Eterbase hack, with the Lazarus hackers opening dozens of anonymous accounts on the crypto platform. The company said it cooperated with authorities in Slovakia, during which Binance identified such accounts on its site and on other exchanges.

The statement also notes the indirect use of “every major exchange” to conduct Hydra-linked cryptocurrency transactions for the marketplace. At the same time, Binance said that tracking crypto assets helped to advance the investigation into the dark-web marketplace.

“This is the ‘uncomfortable truth’ for those who oppose cryptocurrencies — the overwhelming majority of illicit money moves through the traditional banking system, not crypto assets,” Binance said.

Reuters wrote in January that Binance has repeatedly hidden information from regulators, neglected KYC procedures and acted against the recommendations of its own compliance department.

In April, reports said that the regional arm of the exchange agreed to share information about Russian clients with Rosfinmonitoring and the FSB in exchange for help conducting business in the state. Binance published correspondence with Reuters journalists and refuted the allegations.

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