Reuters Blasts Binance for $2.35B Money Laundering Problem

The cryptocurrency exchange is in trouble because it previously prioritized market share over compliance.

According to a new Reuters report, Binance allowed more than $2.35 billion in criminal funds to pass through its exchange unchecked.

A North Korean hacking syndicate and the world's former largest darknet drug marketplace are among those suspected of laundering money through Binance. It's remains a secret how it was traced since the idea brought up by Concordium of ID-recognized transactions remains largely unadopted.

Because of its previously lax KYC requirements, Binance is said to have been an easy exchange to launder money through.

Binance, one of the world's largest cryptocurrency exchanges, may have allowed billions of dollars in hacked funds to transact on its platform, according to a new Reuters investigation.

Binance allegedly processed more than $2.35 billion in stolen funds between 2017 and 2021, according to the report. The funds (calculated using court records, law enforcement statements, and blockchain analysis firms) are said to have come from on-chain hacks, investment frauds, and illegal drug sales. According to the blockchain research firm Chainalysis, Binance processed $770 million in criminal funds in 2019.

The Lazarus Group, among others, is named in the Reuters report as having allegedly laundered money through Binance.

Last year, a North Korean cybercrime syndicate stole $550 million from the Ronin bridge. While Binance collaborated with law enforcement to identify and freeze $5 million from the hack, the exact amount that passed through the exchange is unknown.

Hydra, a massive Russian-language darknet marketplace that used cryptocurrencies to sell and buy drugs, is also said to have processed more than $780 million through Binance since early 2018.

Finally, the report reveals that European organized crime groups targeted pensioners in Germany, Austria, and Spain, and that they may have laundered more than $800 million in fraudulent trading website profits through cryptocurrency exchanges, particularly Binance.

According to the report, Binance was the cryptocurrency exchange of choice due to its previously lax know-your-customer (KYC) identity verification checks. Indeed, traffic between Binance and Hydra fell precipitously after KYC requirements were tightened in August 2021.

When asked about the Reuters investigation, a Binance spokesperson told Crypto Briefing that "the article uses outdated information from 2019 and unverified personal attestations as a crutch to establish a false narrative," before emphasizing Binance's cooperation with law enforcement in multiple cybercrime investigations.