Binance Failed to Deliver on Money-Laundering Prevention Promises: Report

A Reuters report says the cryptocurrency exchange has been lax in cracking down on the financial crime.

AccessTimeIconJul 11, 2022 at 1:44 p.m. UTC
Updated May 11, 2023 at 4:14 p.m. UTC

Binance, the largest cryptocurrency exchange by traded volume, made only weak attempts to prevent money laundering, Reuters said.

  • Binance operated outside the rules that many rival firms follow, while being ambiguous over the jurisdiction in which the main business is located, the news organization said.
  • Reuters also said Binance CEO Changpeng Zhao ignored advice from his compliance team on the lack of background checks to avoid facilitating money laundering through the exchange.
  • "We have a robust compliance program that incorporates anti-money laundering and global sanctions principles and tools used by financial institutions to detect and address suspicious activity," a Binance spokesperson told CoinDesk. "As a result of our strong compliance/KYC program, we were able to secure approvals and registration from France and Italy, making us the only crypto company to do so from G-7 countries."
  • Last month, Reuters reported that Binance became a "hub" for hackers, fraudsters and drug traffickers, claims that were rejected by Binance compliance officer Matthew Price, who said the report used skewed metrics to "get an agenda across."
  • In a bid to curb money laundering on the platform in 2021, Binance slashed its daily withdrawal limit for accounts that had not passed know-your-customer (KYC) protocols to 0.06 bitcoin (BTC) from 2 BTC.
  • It recently ramped up its hiring of regulatory experts, recruiting Seth Levy, who spent 16 years at U.S. regulator Financial Industry Regulatory Authority FINRA, and Steven McWhirter from the U.K.'s Financial Conduct Authority in April.
  • In a statement to Reuters, a Binance spokesperson said that “we are both leading and investing in the future technologies and legislation that will set the crypto industry on the road to becoming a well-regulated, secure industry.”
  • In a separate story, Reuters said Binance continued to serve customers in Iran until September 2021. While the exchange announced a ban on Iranian citizens in November 2018 after the U.S. reimposed sanctions, Reuters found seven traders who said they'd been able to use Binance until the KYC checks were tightened last year.
  • The Binance spokesperson also told CoinDesk that the exchange's "industry-leading sanctions program is fully compliant with all international financial sanctions, including blocking platform access to users in Iran, North Korea, among many others."

UPDATE (July 11, 15:27 UTC): Adds Reuters story on Binance being accessed by users in Iran despite sanctions in last bullet point.

UPDATE (July 11, 16:05 UTC): Adds response from Binance spokesperson.


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Oliver Knight

Oliver Knight is a CoinDesk reporter based between London and Lisbon. He does not own any crypto.