A new Reuters report explains how cryptocurrency exchange Binance allowed cybercriminal groups to earn and launder millions

According to a report by the international news agency Reuters, the cryptocurrency exchange platform Binance would have allowed criminal groups to launder money for more than $2.35 billion between 2017 and 2021, in its eagerness to get an accelerated market growth and leaving aside the implementation of legal compliance policies appropriate to current conditions.

The amount laundered through this platform would have originated from multiple illegal practices, including cyberattacks targeting virtual asset platforms, drug trafficking and sale, and investment fraud. As per Chainalysis researchers, in 2019 alone Binance would have processed transactions with illegal funds for $770 million.

Some of the most notable cybercriminal operations worldwide would have laundered assets through Binance, including Lazarus Group, a cybercriminal entity backed by the North Korean regime and responsible for one of the most devastating attacks against cryptocurrency platforms.

Users and sellers of Hydra, an illegal dark web marketplace that operates on cryptocurrency, would also have taken advantage of lax security measures on Binance to launder more than $780 million in 2018 alone. The report notes that Binance also facilitated a scam campaign in which cybercriminal groups targeted retirees in various European countries to launder more than $800 million through fraudulent e-commerce websites.

Cybercriminal groups used Binance for these activities because the Know-Your-Customer (KYC) identity verification policies on the platform were not properly enforced. This hypothesis is tested simply by analyzing how traffic between Hydra and Binance was reduced from the implementation of strict KYC requirements in August 2021.

In this regard, a representative of the cryptocurrency platform mentioned that the Reuters article “uses outdated information dating back to 2019, in addition to unverified personal attestations to establish a false narrative.” The representative emphasized the willingness Binance has shown to cooperate with law enforcement on multiple occasions, which has allowed major cybercriminal operations to be disrupted.

Feel free to access the International Institute of Cyber Security (IICS) websites to learn more about information security risks, malware variants, vulnerabilities, and information technologies.