Unhappy with mounting pressures from federal governments worldwide, Binance took to their blog yesterday to counter claims made in a recently-published Reuters article which accuses the exchange titan of being a “hub for hackers, fraudsters and drug traffickers.”
In a section titled ‘DARK NETS,’ the blog post dissects claims made by Reuters that the exchange had processed $780 million worth of crypto transactions from the now-shuttered Hydra darknet market between the years of 2017 and 2022. The section claims Reuters knowingly over-inflated figures given to them by blockchain analytics firm Chainalysis while emphasizing the fact that they have tightened up KYC controls over the past two years.
“A review of Chainalysis, or any other tool, shows that every major exchange, including Coinbase, Bittrex, Paxful, KuCoin, and Houbi (sic) had indirect exposure to Hydra,” claimed Binance in their blog post, which went on to describe figures stated by Reuters as “inaccurate and overblown.” The post also provided copies of letters sent to Reuters journalists suggesting they “reach out to Chainalysis, who has confirmed for us that this figure is incorrect.”
Binance CEO Changpeng Zhao (CZ) has traditionally held the Chainalysis in positive regard, referencing their statistics on more than one occasion, but this has not always been the case.
Partnerships between Chainalysis and Binance to address the issue of money laundering via cryptocurrency exchange date back to Oct. 2018. In Jan. 2020, Binance conveyed the following message to Chainalysis in response to a report that concluded the exchange had received more “illicit Bitcoin” in 2019 than all others:
“In every jurisdiction that we operate in, Binance is compliant and adheres to local regulations and KYC requirements. We have built trust among regulators, financial institutions and the public through our developments and values, and we will continue to raise the bar in addressing AML compliance to the highest standard and across the largest asset coverage.” – Samuel Lim, Binance CCO
The report, which inferred that Binance processed around $770 million in BTC from potentially criminal sources in 2019, prompted CZ to accuse Chainalysis of engaging in “bad business etiquette” for refusing to make the data included in its report publicly available.
In May 2021, the US Justice Department and IRS launched an investigation into Binance amid reports the exchange was being used for the purposes of money laundering within the US. In April of this year, Binance was fined by the Dutch Central Bank for violating money laundering laws within the Netherlands, found to be operating in the country without proper licensure.