Binance Partners With CipherTrace in Latest Compliance Push

Binance is partnering with the blockchain analytics firm CipherTrace to beef up its anti-money laundering procedures.

Apr 11, 2019 at 3:00 p.m. UTC
Updated Sep 13, 2021 at 9:04 a.m. UTC
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Malta-based cryptocurrency exchange Binance is embarking on a multi-pronged push to boost compliance procedures across its platform.

To that end, Binance is announcing a new partnership with the blockchain analytics firm CipherTrace to enhance anti-money laundering (AML) processes like tracing the source of on-chain funds and matching user IDs to problematic wallet addresses.

“We are very serious about improving our compliance standards,” Samuel Lim, head of compliance at Binance, told CoinDesk. “We will continue to build our [compliance] team, continue to re-invest in the compliance space.”

The addition of CipherTrace, which is backed by venture firms such as Mike Novogratz’s Galaxy Digital, comes on the heels of a new partnership with IdentityMind on know-your-customer (KYC) compliance. Binance also works with Chainalysis, Refinitiv (formerly the financial risk division of Thomson Reuters) and the Blockchain Transparency Institute (BTI), according to Lim.

“We want our users to have the best trading experience, to know that they are safe that they are not trading with crooks or bad actors,” he said.

For example, the analytics firm Whitestream identified a Binance account that allegedly received bitcoin from supporters of the military-political group Hamas, which the U.S. deems to be a terrorist organization. Most experts agree such cases are extremely rare.

Financial crimes present a more common reputational risk, especially considering the regtech startup Coinfirm identified Binance as an exchange that may not always enforce restrictions based on KYC requirements.

Along those lines, a BTI report released this week found that although Binance trading volumes were more than 85 percent authentic some wash trading – the practice of simultaneously buying and selling the same assets to create the illusion of market activity – was occuring with niche token pairs. So BTI development director Marco Paez told CoinDesk his research firm is working with Binance to crack down on wash trading.

Coupling those BTI insights with CiperTrace’s services could complement the broader compliance push across the Binance ecosystem. However, Lim said these partnerships are merely enhancing Binance’s existing capabilities, adding the exchange already has an in-house team with “dozens” of legal and blockchain analytics experts devoted to tasks like platform moderation, AML and KYC compliance.

Indeed, Lim said Binance’s compliance team is committed to continually raising the bar as the regulatory landscape and user behaviors also evolve.

Said Lim:

"Compliance is always a quest, you are always on a journey to improve your compliance."

Binance image via Shutterstock

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