Binance hub for hackers, fraudsters and drug dealers, billions in crypto embezzled

Last Updated: 7 June 2022

Binance has been used to embezzle 2.35 billion dollars in stolen cryptos. This is what Reuters news agency reported in an extensive story. The North Korean hacker group Lazarus also used the world’s largest bitcoin exchange, according to the researchers.

Binance hub for illegal activities?

In September 2020, hackers from the North Korean Lazarus Group stole around $5.4 million worth of crypto currency from the small Slovakian exchange Eterbase, including some bitcoin. These crypto currencies were sent to addresses on Binance.

Using encrypted e-mail addresses, the hackers opened dozens of anonymous accounts on this exchange run by Changpeng Zhao, one of the richest people in the world. The removal of digital traces proved successful, as the stolen cryptos were never found again. The proceeds would be used to partly finance North Korea’s nuclear weapons programme.

https://youtu.be/n0J6vuf2YFc

It fits into a larger picture where Binance acts as a hub for hackers, fraudsters and drug gangs, according to Reuters. Binance has been used to embezzle $2.35 billion in crypto-currency between 2017 and 2021. Transactions that have been linked by governments and investigative agencies to hacker groups, drug gangs and other criminals.

https://twitter.com/fintechfrank/status/1533782740163866625

One of the most notable groups to have used the exchange is the Lazarus group, a feared hacker collective from North Korea who are behind several hacks in the crypto world. Among others, the US government has sanctioned the group for carrying out cyber attacks against the West. They are also associated with the recent hack of Axie Infinity’s Ronin sidechain, in which $600 million was allegedly stolen. According to Chainalysis researchers, Lazarus has managed to loot around $1.75 billion in crypto money by 2020.

Binance says it is proactively cooperating with every investigation request. Referring to the hack of Eterbase, they also say they have ‘fully cooperated with requests received from the Slovakian authorities’.

Identification requirements

It is not that exchange has been completely idle. As the largest exchange on the bitcoin market, they can no longer hide behind shady policies either.

Binance says it tightened identification requirements on its trading platform in the summer of 2021. Research by analysis company Crystal Blockchain shows that the flow of illegal funds has fallen sharply. However, it is unclear what Binance’s policy is when a customer loses their coins. For example, there has to be an official investigation request and aggrieved customers have to sign a confidentiality agreement.

In 2019, the exchange itself was the victim of a hack in which $40 million was stolen. As far as is known, those affected were then compensated from a Binance insurance pool. At the beginning of 2022, the exchange announced that it would set up an insurance fund of USD 1 billion to cover any damages.

Earlier this year, Reuters presented accusations against Binance. The exchange would share personal data of Russian customers with the Russian government. Binance found this ‘pertinent nonsense’. Binance does not (yet) have a registration in the Netherlands, but does have licences in France and Italy.

Bloomberg reports that the American regulator SEC has also launched an investigation into the Binance token BNB from 2017, with the key question being whether it can be classified as a security.

Author

  • Ivan came across the topic of cryptocurrencies in early 2016 and, as an author and enthusiast, has been intensively involved with the topics of cryptocurrencies, blockchain and STOs ever since.

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