Binance, as the world’s largest crypto exchange, has experienced its fair share of fraudulent activities. Over the past six years, scammers have used its channels to erase transaction records after ripping investors off millions.
As claimed by the City of London Police, UK investors cheated off 36 million euros last year in fraud relating to Binance.
A Freedom of Information (FOI) request explained that Binance thefts made up to 17% of the 204 million euros from crypto fraud reported to the police in 2021. According to the police, the figure is based on offenses reported to Action Fraud, the UK’s national reporting center for cybercrimes. The report also covered other fraudulent activities, including coins and wallets.
The Freedom of Information Act was enacted in 2000, providing public access to information held by public authorities. The act has made it easier for individuals to request information controlled by public authorities and has since been used to expose the actions of organizations like Binance- the largest crypto exchange in the world.
Currently, Binance is facing a tough time dealing with global regulators concerning protecting investors and their funds.
Last year, the Finance Conduct Authorities banned Binance from operating UK “regulated activities” amid fraud and money laundering concerns.
Not Binance First Rodeo
A report by Reuters Investigates explains that the crypto pacesetter has become a conduit for hackers, drug traffickers, fraudsters, and other illegal activities, with over $2.35 billion in illicit funds uncovered. In 2020, the notorious North Korean hacking group- Lazarus- slipped into a Slovakian crypto exchange, Eterbase.
They stole crypto worth $5.4 million and immediately opened Binance accounts, allowing them to deftly cover their trail with encrypted email addresses.
The cryptocurrency stolen from Eterbase was traded, and the firm could not locate or recover the funds. Reuters further explained that Binance authorized transactions arising from investment frauds, illegal drug sales, and hacks during the same period.
In addition, a Russia-language darknet marketplace known as Hydra is said to have used crypto to buy and sell drugs, using Binance to process around $750 in illegal funds.
According to some sources, an independent crypto researcher Chain analysis was hired by US government agencies to track illegal flows. In the 2020 report, Chainanalysis concluded that Binance received criminal funds totaling $770 million in 2019, not counting the laundered money in that year.
Binance has responded to investigation reports, calling them “crypto money laundering myths,” saying the articles talking about the situation were riddled with “falsehoods, and massive leaps to conclusions and relies on poor data that could have been fact-checked.”
“We highly suggest you ignore those authors who cherry-pick data, rely on unverifiable leaks from regulators, and feed into the cult of crypto paranoia for fame and financial gain,” they added.
In a blog published in May, they added the entire email exchange between their team and Reuters, where they responded to inquiries about fraud cases, the Lazarus cases, and issues regarding Monero- the privacy blockchain.
Bitcoin’s Influence
Consensus showed two-thirds of crypto fraud victims were men, with one in five falling under the age of thirty. The FOI report added that most scams used Bitcoin, the largest cryptocurrency. Bitcoin has also become a financial enabler for various illegal activities like fraud, trafficking, money laundering, etc.
Binance Global Head of Intelligence and Investigations, Tigran Gambrayan, was displeased by the FOI. He asked why the city police did not extend their investigation to other crypto exchanges or provide specific figures. He stated that the company would be working to seek a breakdown of how the alleged 36 million euros related to Binance’s “coin and wallet.”
In his words, Binance supported the BNB coin but “didn’t control it.” “This is not typical of law enforcement to identify a specific company this way,” he added.
Binance Global Law Enforcement Training Program
On Sept 27, Binance formally announced its Global Law Enforcement Training Program, created to help law enforcement agents detect financial and cybercrimes and to “assist in the prosecution of bad actors.”
Gambrayan explained that the program would meet the demands for training to help raise awareness on and combat crypto crimes.
