A Deep Look Into Binance: Can It Really Be Trusted?

FinanceTrading / Investing

  • Author Deniz Tutku
  • Published March 11, 2024
  • Word count 1,260

In the crypto industry world, it is important not only to choose the cryptocurrency in which you invest your funds, but also the cryptocurrency exchange on which you can trade.

One of the most popular exchanges in the world is Binance. Almost every crypto enthusiast has started their journey with this exchange. But is it the best, as they describe it? I suggest you consider several situations that will make you think deeply about it.

Binance data leak

The well-known publication 404 Media has learned that confidential cache codes, internal passwords, and other technical information belonging to Binance have been freely available on GitHub for several months.

The exchange was forced to remove this data only last week after a copyright infringement request. However, 404 Media and numerous others could view the data before it was removed.

When 404 Media contacted a Binance spokesperson on January 5, he responded: “​​We are aware that there’s an individual online claiming to have sensitive Binance information.”. According to the representatives, the security team evaluated the data, which does not look like the data they used to have.

The data leak was published by an account named Termf. It is currently unknown whether the leak was accidental or caused by a Binance employee or someone outside the company.

Representatives can assure us that this is not the data that is currently being used, but then how do you explain the following news?

Selling Binance user data on the Dark Web

On February 4, social network X began spreading information that verified Binance user data had appeared on the Dark Web. The post advertised the sale of data containing the names, countries, and phone numbers of users.

The message adds that this data relates exclusively to English-speaking users from Tier 1 countries. To verify the authenticity of the data, the seller suggests trying to log in to the account using phone numbers or contacting the users themselves. The veracity of this information has not yet been verified, but such statements are worrying.

In response to this post, a user called Bitfinexed aptly noted: “It’s always a good idea to give your personal information to exchanges that also knowingly launder money for terrorists. Nothing could ever go wrong here.”

Binance’s cooperation with organizations such as Hamas is not a little-known fact. While some exchanges such as WhiteBIT, Bithumb, Korbit, and many others have taken a conscious stance and cut all ties with the Russians since the first days of the full-scale invasion, Binance has deliberately continued to provide them with its services for almost 2 years.

Recently, they announced that they were supposedly ending their cooperation, but in a very short period, a new exchange, CommEx, appeared out of nowhere, and they transferred their rights to it. Continuing with the fact that they were fined for financing Hamas and violating sanctions.

This is not the first time such situations have happened on a cryptocurrency exchange. In 2019, they had a similar incident. Back then, they were investigating a possible leak of user verification information.

However, the exchange rejected the claims and pointed out the inconsistency with their internal data and the lack of a digital watermark for their system.

At the time, the incident included threats to publish 10,000 photos with Binance KYC in case of non-payment of a ransom of 300 Bitcoins, which was rejected by Binance.

Although the exchange claims to cooperate with law enforcement agencies to resolve such incidents, one wonders whether they can be trusted with personal information.

Binance accusation in Europe

France:

In the summer of 2023, an investigation was launched against the exchange’s French subsidiary in connection with anti-money laundering procedures and the fact that it offered its services before they were registered with financial market regulators.

CoinDesk was informed about this incident by the Paris prosecutor’s office. The investigation concerned the exchange’s illegal activities as a digital asset service provider before it received regulatory approval and “aggravated money laundering through participation in investment transactions, concealment, and conversion.”

In December 2022, a lawsuit was filed against Binance on behalf of more than a dozen plaintiffs who claimed that their commercial practices were misleading, illegal campaigning, and fraudulent.

Belgium:

In June 2023, the Belgian Financial Services and Markets Authority announced that Binance was providing trading and wallet custody services in Belgium to countries that are not members of the European Economic Area, which is prohibited.

This led market regulators to issue a ban on offering or providing any services in the Belgian market. During the suspension, Binance was instructed to cease operations in Belgium and return all cryptocurrencies and private assets to its customers in that country. However, Binance has resumed registration and access to its products and services in Belgium due to regulatory obstacles.

Uzbekistan:

Recently, the National Agency for Prospective Projects (NAPP) of Uzbekistan sued the exchange after it failed to pay a fine imposed in January. The exchange was fined 102 million soms (~$8,200) for operating without a license. Since Binance ignored the situation and did not pay the fine, the NAPP had to go to court.

In August 2022, Uzbekistan blocked access to Binance and some other exchanges, such as FTX and Huobi, explaining that only exchanges licensed by the NAPP can conduct cryptocurrency transactions. Despite the blocking, Binance continued to operate illegally.

When they were fined in January, the NAPP also claimed that, in addition to licensing requirements, Binance failed to comply with anti-money laundering (AML) and KYC requirements.

Reuters Investigation

In June 2022, journalists from Reuters, a global information and news provider, published an investigation into the laundering of at least $2.35 billion in illegal funds by the exchange.

The investigation says that in 2020, a hacker group known as Lazarus stole about $5.4 million worth of cryptocurrency from a Slovak exchange Eterbase, after which they created about 20 Binance accounts in a few hours.

Thanks to these accounts, they were able to convert the stolen funds and hide the traces of the money. The investigation showed that Eterbase’s lost money was part of a flow of illicit funds that passed through Binance from 2017 to 2021.

Reuters was also able to review data on Binance customers’ transactions on darknet sites. The data showed that between 2017 and 2022, buyers and sellers on the world’s largest darknet drug market, the Russian-language Hydra website, used Binance to make and receive $780 million in cryptocurrency payments.

The data collected for Reuters included cryptocurrency that passed through several digital wallets before ending up on Binance. Money launderers often use this method to create complex chains of cryptocurrency transfers to hide their tracks.

Money laundering case

In November, former Binance CEO Changpeng Zhao pleaded guilty to federal money laundering charges and was forced to resign.

After a multi-year investigation, the US authorities claimed that the exchange provided criminals with access to the platform and allowed transactions related to child sexual abuse, drugs, and terrorist financing.

Binance was forced to pay $4.3 billion to the US authorities to drop the criminal charges. Zhao faces up to 10 years in prison. He also agreed to pay a $50 million criminal fine and a $150 million civil penalty. He will be sentenced on February 23, and until then, he remains free on $175 million bail.

Conclusion

To ensure the protection of your funds and personal information, you need to not only use security measures but also choose a reliable cryptocurrency exchange. All this undermines the credibility of Binance as a reliable platform to use.

Disclaimer: This article is for informational purposes only and should not be taken as advice on which cryptocurrency exchange to use. Please do your research and make your decision based on diligence.

I specialize in writing articles about cryptocurrencies, blockchain, Web3, AI, and development.

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