On the 3rd of March, 2023, the CEO of Binance revealed that the exchange would be partnering with law enforcement agencies to fight scams. Changpeng Zhao, also called CZ, noted that Binance is more determined than ever to protect its users. Binance claims to have the world’s most advanced anti-money laundering system.
About a month ago, Binance partnered with the Hong Kong Police force to fight cybercrime. According to Jarek Jakubcek, “the exchange will commit to building a secure blockchain ecosystem by bolstering international cyber security.”
Since the start of the anti-crime campaign in February, about 20% of users in Hong Kong have reconsidered withdrawals or reviewed whether the transaction carried the risk of scam. Binance also launched a law enforcement program last year. Since the start of the program, the exchange has successfully sponsored over seventy workshops.
Binance Faces Accusations, CZ Defends the Exchange
Despite CZ’s diligence in fighting crypto scams and shady financial transactions, the Binance exchange has been criticized multiple times. On the 28th of February, CZ vented his frustration on Forbes for accusing Binance falsely.
Forbes news published a report painting Binance in the same light as FTX. In his defense, the Binance CEO emphasized that the news media failed to publish all the details of the so-called shady transaction. Changpeng Zhao also acclaimed that users could verify the amount held by the exchange versus the amount of crypto deposited via Merkle trees proof-of-reserves.
This would not be the first time Binance would face an attack from the press. Sometime last year, several news publications also pointed accusatory fingers at Binance. The exchange was tagged “a middle-man for fraudulent transactions.” One news media noted that $2.35 billion of dirty money passed through the exchange between 2017 and 2022.
What the Facts Reveal
Although crypto scammers are fond of transferring laundered cryptocurrencies to sell off on centralized exchanges, Binance has played a key role in curbing scams. In a famous crypto heist engineered by some North Korean fraudsters, Binance successfully froze and recovered about $5.8 million worth of crypto. Notably, the criminal group attempted washing the stolen funds across several exchanges, and only Binance recovered so much.
Further, data from Chainalysis reveals that while crypto scams may be rampant, more money laundering and illegal activities involve fiat over crypto. For example, in 2021, only 0.15% of crypto’s cumulative capitalization was linked to illegal activities. On the other hand, the UN estimates that about 2% to 5% of fiat is used annually for dirty activities.
While some governments and organizations often tag cryptocurrencies as a tool for illicit activities, the statistics prove otherwise. Certainly, Binance’s recent actions in collaborating with law enforcement agencies reflect the values of the exchange.