Binance hits back at claims it’s a ‘hub for hackers, fraudsters and drug traffickers’
Binance, the world’s largest cryptocurrency exchange, has brushed aside claims it is a “hub for hackers, fraudsters and drug traffickers,” after a Reuters investigation accused the Cayman Islands registered firm of serving as a “conduit for the laundering of at least $2.35bn in illicit funds”.
In a blog post responding to Reuters’ article, the coin exchange hit back at claims that its platform is a “money-laundering paradise,” as the crypto exchange, first established in 2017, accused its “opponents” of creating false narratives in a bid to “limit the growth of crypto and Binance.”
The comments come after Reuters accused Binance of acting as a haven for North Korean hackers, investment scheme fraudsters, and darknet drug dealers, following an investigation into the firm.
The new agency’s investigation sets out claims that Binance’s platforms have served as a “conduit” for North Korean state-backed hacking group Lazurus, in its efforts to launder millions worth of stolen cryptocurrency with the aim of bankrolling North Korea’s nuclear weapons programme.
The Reuters article also claims Binance chief executive Changpeng Zhao’s ambitious efforts to capture market share led to the coin exchange becoming a “key payment provider” for darknet drug market Hydra and a haven for those running a variety of investment fraud schemes.
In response, a Binance spokesperson told City PM that the Reuters article uses “outdated information… to establish a false narrative,” as they said Binance plays a “significant leadership role” in tackling financial crime.
The spokesperson said Binance “has some of the strictest anti-money laundering (AML) policies in the fintech industry,” as the firm claimed it continues to receive “overwhelming support from partners in law enforcement” for its “pioneering work”.
The comments come as Binance has faced mounting regulatory scrutiny, from watchdogs across the globe, over claims it lacks transparency and allegations it is failing to properly prevent financial crime.
The investigation comes after the UK’s Financial Conduct Authority (FCA) banned the exchange from taking part in any regulated activities without the written consent of the watchdog itself in June of last year.
An FCA spokesperson told City PM that its decision to ban Binance from taking part in regulated activities “was put in place because, in the FCA’s view, Binance Markets is not capable of being effectively supervised”.
The FCA spokesperson also reiterated the regulator’s position that the “minimum standards” it has in place are there to ensure the UK’s financial system is “not open to abuse by those who want to move and hide money made from violence, drugs, corruption, or exploitation of others”.
A spokesperson for the UK’s Serious Fraud Office (SFO) told City PM “We know criminal groups use crypto-currency to scam investors, especially those who aren’t technologically savvy, out of their money and that funds can often be moved instantaneously and anonymously.
“At the SFO, we won’t stop fighting serious fraud, bribery and corruption in whatever form it takes and as new opportunities for fraudsters emerge. We will continue to work alongside our domestic and international law enforcement partners to tackle this issue.”