Bitcoin Forum

Hacked exchange Zaif alleges thieves sent 1,451 bitcoin to an address belonging to Binance. (which was worth $9.4 million)

The allege that Binances (KYC) and anti-money laundering (AML) protocols “do not measure up to industry standards.” allowing the thieves to launder the bitcoin.

They are holding Binance liable for the loss plus damages.


https://i.imgur.com/mIfuKZS.png


Source: https://modernconsensus.com/cryptocurrencies/hacked-crypto-exchange-sues-binance-for-allegedly-laundering-the-stolen-funds/
Lawsuit download: https://www.tbstat.com/wp/uploads/2020/09/Binance_Fisco.pdf

They're quite right though. It's quite easy to launder smaller amounts of money as the no-KYC limit is 2 BTC per day if I remember correctly. Not sure how they laundered 1,451 BTC without exposing their identity though. Probably stolen documents?

Probably the OP source: https://www.coindesk.com/japan-cryptocurrency-exchange-zaif-fisco-binance-laundering-hack, for complete details.

I think the none KYC verification upon withdrawal of 2 Bitcoin will possibly scammers take advantage of this case. Probably they can make tons of accounts just to withdraw the laundered Bitcoin that deposited on Binance. Upon searching, I didn't find any response to this case from Binance even on their social media accounts Twitter.

I'd sense of jealously on one of the big exchanges. If they probably report the Bitcoin address of scammers, the Binance team might freeze the account of scammers.

So they actually did take advantage of the 2 BTC limit..

Correct me if I'm wrong, but assuming that the 1,451 BTC came from one wallet address, I was expecting better security measures from Binance knowing that it's one of the biggest cryptocurrency exchanges we have atm. You'd expect such move from the hackers would automatically raise huge red flags on Binance's side.

This will be a good lesson for Binance to strenghten its security. It looks like it was easy for thieves to take advantage of 2 BTC limit for no KYC. I don't understand why a very good crypto exchange like Binance overlooked this. This incident could tarnish Binance's image.

There are dozens of such exchanges, everyone can comfortably trade with amounts below the required KYC withdrawal regulations. Maybe they should amend their laws to avoid cases like Binance. Their withdrawal censors were downright sloppy when they let criminals launder money on their exchange.
Complaints have been filed and they are held accountable for what they let happen.

Binance is big enough now that its going to get sued for issue X routinely like all Corps.

I am wondering if the Binance had an official statement or response in any of their platforms regarding this issue. Do you happen to know?

It's funny how they are seeking for compensation for the losses as if it's Binance that was responsible for the poor security protocols in their shit exchange that led to hackers being able to steal all that bitcoin in the first place.

The 2 BTC rate per day is too small to launder such amounts of money unless they used so many fake accounts which brings the question of, how were they able to trace that all the bitcoins the claim went through Binance?

What kind of hacker would move such amounts of BTC to a centralized exchange where they can easily seize it without thinking of mixing it?

Those thieves really took advantage of the 2 bitcoin TX limit to avoid kyc, they were smart enough to split it and change it into different cryptos, but this looks really bad, this could tarnish the image of binance, allowing thieves to move stolen money into their exchange, I thought binance team should have been aware of this first, they shouldn't let stolen btc's or crypto get into their exchange, or if it comes in they should have freezed the account, what a sloppy move from binance team tho, now they are getting sued for it.
I'm still waiting for to see if binance would release an official statement about this issue.

i'm not surprised to hear this, usually all these laws and restrictions such as the KYC and AML that exchanges apply are only there to mess with regular users and make things harder for them. those real hackers with stolen money are always getting away a lot easier and there isn't much that any exchange has ever done to them.

That is what they are claiming, the hackers made 7000 transactions amounting to 1,451BTC and created 7000 accounts in binance and got away with it and they even informed the binance team about the money laundering taking place and they never took any action nor they did respond to the request of holding the funds. The ever vocal CZ is silent in these situation and i wont be surprised if the binance team will be in trouble in helping them launder the money.

Not directly. They split the funds in to multiple different addresses over a couple of transactions before depositing to Binance. Some of the coins were also mixed and therefore lost track of. See: https://medium.com/meetbitfury/crystal-blockchain-analytics-investigation-of-the-zaif-exchange-hack-a3b4d1faed8f

Completely this. It is very similar to the Cashaa hack (https://bitcointalk.org/index.php?topic=5261678.0) which was posted about a few months ago. Basically the CEO blaming the other exchanges for accepting the stolen coins and saying they should be shut down. It essentially boils down to "Our security was so bad, we want Big Brother to take over Bitcoin." Won't be long before exchanges start proposing chain rollbacks to fix their mistakes, oh wait, Binance already did that!

Exchanges simply need to take some responsibility for their own wallets, and customers needs to understand that anything store in an exchange is constantly at risk of complete loss. If this lawsuit is successful, then I wouldn't be surprised if it is the end of the "2 BTC unverified limit" accounts on Binance and elsewhere. Decentralized trading is becoming ever more attractive.

The FATF has recommended the use of KYC for transactions over one thousand euros. Two bitcoins are over $ 20,000. Basically, Binance is violating the general rules for preventing dirty money laundering and combating terrorist financing. If thieves were able to sell more than 1,400 previously stolen bitcoins on this exchange, then there will be big problems in it both in court and with regulators.

The history of all these exchanges should make any of this stuff make you think twice about whether this kind of stuff is poor protocols or if it's all done by design.  Look at Coinbase's history for example.  Years of no service, no real exchange upgrades etc all the while they were rolling in millions upon millions of dollars. Exchange freezes still happen there.. why? I don't trust any of these exchanges, every one of them has a laundry list of  things exposing their true nature. There needs to be much more strict oversight.. it seems like to me the ones who have it likely aren't doing it legitimately ( think Wolf of Wall Street where they hired their own compliance officer to say everything's all good and compliant but it was pure smoke and mirros)

That's a big amount of bitcoin, and they will spend the money necessary to recover them. But isn't binance fault to get those coins, the ones to send it there were the attackers. So, isn't fair for binance, they can't be tracking all de deposits and sending back the founds for those depo that comes from dirty coins. What if this proces is just another scam to stole now the bitcoins from Binance? A good group of lawyers could fuck us all if the right way to proceed is the legal way.

It was the fault of the poor security of the bag. What I can't understand this Japanese Exchange is accusing binance when they know it is their fault, it looks like Binance has some crystal ball to know that deposit X came from hacked bitcoin. What this Japanese exchange should do was ask for help with binance and not be accusing Binance

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The incredible thing is that this Japanese stock market spent a lot of time digging into the binance location instead of worrying about knowing the identity of the hackers

I doubt Binance will be held liable for money laundering but I'm still interested on how this will pan out. If ever they're charged as guilty, that will probably force their hand to change the no KYC for 2 btc or less withdrawal policy. That will be another game changer and will shake the CEX leaderboard.

They don't need to have a crystal ball. The bitcoins allegedly sent by the hackers to Binance were not even mixed so it can be seen on the blockchain. As stated in the news, Binance was informed by the Japanese exchange but they never bothered to hold the funds. 

I never thought I'd say this, but I'm on Binance's side here. It is not their responsibility to cover for the mistakes and poor security of other exchanges. Someone contacting them and saying "Can you freeze these funds?", especially when those funds have come from multiple different addresses and could all have changed hands prior to reaching Binance, should not be sufficient for users to have their Binance accounts locked or frozen.

We should not be encouraging the development of a nanny state. If you want to use money which can be arbitrarily frozen or seized, then stick to fiat.

Disagree. The whole point of bitcoin is to not have third parties which can control your money or what you do with it. Instead, the community needs to stop using and trusting these centralized exchanges, especially when they have proven themselves untrustworthy time and time again.

So when they were the ones affected they were ready to try to rollback all the chain, when they were not they didn't care even if the coins were sitting in their wallets to block the transactions, now, it's karma time.

I'm definitely grabbing some popcorn for tis one..
If the court decides it has jurisdiction over this since it involves US citizens, it's the end of the game for the stupid mantra of CZ with Binance operating from nowhere and everywhere, and his constant fleeing like a butterfly from HK to Japan to Malta to nowhere.

Binance has become toxic for this environment, worse than bitfinex and tether, I'm enjoying this from the bottom of my heart.

Like I said above, I also doubt Binance will held liable because I was also thinking it would be difficult to prove that the addresses used to transfer funds belong to the hacker/s. The accuser assumed they were and was expecting Binance to believe him but they didn't.

I was restating what was in the news and what was in that medium link you also shared as a response to the "it looks like Binance has some crystal ball to know that deposit X came from hacked bitcoin" statement. Regardless of who owned those bitcoins when it was deposited, they still came from the hacked exchange.

I think you may forgot that they are hackers and they usually keep all their plans ready before playing their final game. You can't expect that they will keep all the fund on the same address and will not mix it. I don't think it will put effect on binance reputation where hacked exchange security weakness is the main point here.

Yeap agree with you. Although i don't think they will charged as guilty but hopefully they will gonna make some changes on their no KYC withdrawal policy.

I agree, to me this seems to be a veiled attack on binance and their policy of not exercising KYC on small transactions and to try to bring an end to this as it gives people a privacy that it is difficult to get these days.

However I find really difficult the Japanese exchange is going to win this, they are trying to make it seem as if Binance itself is involved when this is clearly not the case, after all the Binance exchange is so powerful that they do not need a few additional million dollars and it will be dumb to think they will risk their reputation over this, however I wonder if this will lead to a change on binance policies and if KYC will be mandatory for everyone from now on.

I think the blame is not on Binance, if the attackers Hacked the exchange and steal this large amount of Bitcoin and transfer it to Binance, they could have transferred it to any other exchange!
But on the other hand, depositing this large amount of Bitcoin should raise questions with Binance and request Kyc and AML.
I suspect there is something strange or missing in this story.

Agreed. Trying to stick their fingers in every pie - coinmarketcap, browsers, credit cards, etc - all while dumping trashcoins and scam ICOs on their users. They are trying to centralize the entire space for their own gain. It boggles the mind that people are apparently interested in financial independence, but also happy to continue to use and support entities like Binance.

So if I anonymously trade peer-to-peer and buy some bitcoin which happens to have come from a hack, through no fault of my own I deserve to have my coins seized and my account frozen as soon as they touch an exchange? Whatever happened to fungibility?

Hopefully!? Why are we hoping they are going to put in more strict KYC policies? More KYC and more privacy invasion is the last thing any of us should want.

I honestly can't understand why we would want more regulation, more oversight, more KYC, more privacy invasion, more subversion, more subjugation. The answer to an exchange being hacked is to stop holding your coins on exchanges, not to ask for governments to step in and take control.

Not your keys not your Bitcoins it doesn't matter that they were stolen. You gave them the keys you gave them the coins!

The moment those thieves got hold of the coins the exchange stopped being the owner. There are no returns or chargebacks with Bitcoin. They can't demand any compensation from Binance.

Also even if they have proof that coins were deposited on Binance that's not how KYC laws work. You can deposit without KYC and you can also withdraw without it just within small limits.

Even though I don't favor Binance much, it's not their fault. Asking for a chargeback is plain stupid in this situation

Indeed, the stolen Bitcoin was divided into 7 thousand transactions in different accounts, taking advantage of the minimum withdrawal of 2 BTC every 24 hours.

Perhaps if with a security mechanism that detects the IP address of these transactions, the laundering of funds could be detected.

The accusing party alleged that it warned Binance in time and that it was negligent and could prevent the criminal act. Only the result of the investigation remains if Binance was able to prevent it and pay the lawsuit or demonstrate its good procedure.

I think that case will not prosper not unless the plaintiffs can prove Binance's knowledge in the hack and that it had wittingly and actively participated in laundering its funds.

Its like suing a bank because the robbers had deposited the money using several accounts which had been acquired in a proper way like e.g. (Binance level 1 unverified account) which is allowed to withdraw less than 2 BTC.

The element of Binance's guilty mind could be hard to prove in that situation and the plaintiffs had definitely have the burden of proof to convince the court of its case. Imho.

The exchange was not to blame in this case, Cryptocurrency is really hard to track, and you wouldn't know who's, who that's the sole purpose of anonymity. KYC could easily be bypassed, its not all safe. One could easily create fake ID's or steal identity from other people, its not like they could verify the ID in that country. Maybe that's the reason they're able to deposit huge amount of BTC.

More like forged documents. Stolen stuff can be tracked, forged stuff can't.

You are right, but even if the limit was 0.001 btc, you could just create accounts non-stop, but that would also hurt the casual crypto dudes imo

Let's admit that Binance has partly fault here.
First off, they have weak KYC protocols.
Second, they have high withdrawal limits.

That was few reasons why users grab the opportunity and took advantage of it. With those everyday withdrawals of 2 btc, haven't the Binance suspected some suspicious activity here? It's pretty obvious that money laundering activity is on going and they can actually freeze those transactions. However, I still doubt they can do such if the suspected users used different or multiple accounts.

There are a lot of tools to monitor the transfer of asset to and fro, TrackX is one of them and I have traced many transfer to centralized exchanges. If it was reported and Binance does not block the account from operation, they will be guilty I think, but I am not a lawyer. The only thing they have to do is evidence they own the said amount of BTC, the transfer sequence to Binance centralized exchange and the official report to Binance staff of such movement.

I am sure Binance will be found not guilty, and indeed this incident is not Binance's fault. Since the hacker is only taking
advantage of Binance's rules regarding withdrawals of 2 BTC there is no need for KYC procedures. And also an incident like
this will not damage Binance's reputation, there Binance will be increasingly popular with this news. It is highly likely that
Binance will change their system, the rules regarding KYC will be fully enforced to prevent this from happening again.

Yeah! Why not look for the thieves instead.  ;D
2 BTC every 24 hours. It will take a lot of time for them to launder it.
If I am the thief I won't go that way. I want it all handled as fast as I can with a little trace.
And to be exact.

There is no proof.
Of course Binance will answer this and will just say they are innocent about it.  ;D

previous users will complain if ever binance policy changed and require a kyc because of this issue but they dont hate binance rather they hate the people that reports binance .

 its also like a blessing in disguise for binance because they will be on the headlines again and it was like free promotion  as what you said but there could also people that think negative towards binance , we cant avoid that.

I talked about crystal ball because I doubt anyone would transfer so much stolen money to an exchange where he could only withdraw 2 bitcoins a day, while that person could simply use many mixers that all his work would be much easier. I will wait to see what the outcome of this story will be in court. however in this article there is a lot of information about binance that always says there is no physical office in any corner of the planet.

That would be a worst nightmare to a certain identity being use if will get trace and lead to a certain user who had no information on the current event that was happening. Actually 1400 + bitcoins to launder would be needing KYC and the user has the guts to do it. So hard to believe news these days. This year really a worst year for us having the pandemic plus people around doing dirty activities. This will not definitely will not going to put a stop and will probably going to continue and will gets worse as time pass by.

It truly is scary and really really dangerous. This is one of the reasons why privacy and security advocates frequently tell people to take their internet security and privacy seriously. Because once your personal information and documents gets leaked to the internet? There's a decent chance that you're gonna get screwed.

I think Binance's alibi would be that they had acted in good faith, hence the 2 BTC daily withdrawal for unverified accounts. Morever, Binance is not the only exchange imposing more or less on such withdrawal limit for unverified accounts.

In this regard,  Binance would only be accountable and liable if the aggrieved party could prove that they have previously informed them of such illegal activity and Binance didn't do any action such as freezing those accounts involved to mitigate the situation.

I wonder what this exchange would have done if the criminals had sent all the coins directly to a mixer or via coinjoin. Would they be trying to sue wallet developers? Or perhaps the bitcoin developers themselves for coming up with coinjoin? ::)

Read the article I shared above. They did not move all the coins through a single account over several months. Rather, they created multiple accounts and used them all simultaneously.

If you have your identity stolen and used in a money laundering or similar scam, you can end up with a criminal record and serving a punishment for a crime you did not commit. It can take years and tens of thousands of dollars of your own money to get your name cleared, all the time leaving you with a criminal record, unable to get a job, get insurance, and so on. It's difficult enough when the crime is in fiat and you can show account statements and similar which prove you had nothing to do with it. How much harder do you think it will be for bitcoin? How do you prove you do not own a bitcoin address?

Every time you complete KYC anywhere you are taking a risk.

They did, but can they sue Binance for that.

Binance has been operating with a license and if they have an anti money laundering policy, that should be based on what the regulators are directing them to follow and implement, so I don't think that Binance is guilty for this case since they have their policy and it was not  penalize by the regulators.

If they will do that to Binance, then the rest of the exchanges are also not implementing their anti money laundering policy based on standards.

Even Bisq has a 0.01BTC trading limit for unverified accounts, and Binance has withdrawal limits as high as 2BTC?? What's the point of blocking access to whole countries if they can just transfer it to someone abroad who can withdraw it to a bank account they control?
If you're going to implement AMLs then at least do it properly, false impressions of compliance are worse than no compliance at all.


Legally they can't file a lawsuit against a collection of open-source developers if they have a legal complaint with the software they're developing, because an open-source project is not a legal entity. Instead they usually go after major corporate users of said software, like how SCO sued IBM (or was it Novell?) to claim Linux kernel source code as their intellectual property. In this case if they were to initiate such a hare-brained case they'd be going after Blockstream, who sponsored some of the bitcoin devs at the time Coinjoin was made.


Agreed, KYC is fundamentally broken. If you complete KYC for your bitcoin services you are effectively using a less useful form of payment than credit cards, since those are accepted practically anywhere, whereas Bitcoin isn't. You need to give your documents to every single vendor you want to buy from, versus a centralized bank or payment processor.

AML regulations seem to have been hastily written as soon as regulators noticed that bitcoin was being used for illegal things like Silk Road. They are playing a game of whack-a-mole if they put KYC requirements on the top 50 exchanges but you can just withdraw your BTC to a credit card on Yobit or <insert other shady exchange here>.

I've never completed KYC before, and probably never will, because I can't afford to lose my identity. But, I also feel bad for bank account commoners whose bank documents are stolen and used for identity theft but they are not even aware that their identity has been stolen.

Why have to worry for lost your identity with rusted exchange like Binance, maybe for withdrawing under 2 btc every day is not have to kyc and bigger investor will submit KYC for allowing withdraw more than 100 btc every day, right now many people always try to KYC because some time have good chance to get profit when arbitrage.

Withdrawing 2BTC / day can be risky, any custodian wallet, including Binance can easily seize the funds if they get the chance.
Binance has also some bad guys caught in their history (see here (https://twitter.com/binance/status/1177273803883204609) or recently here (https://www.binance.com/en/blog/421499824684900882/The-Bulletproof-Exchanger-Project-How-Binance-Helped-Take-Down-a-Cybercriminal-Group-Laundering-$42M)). Of course, catching a few rotting fish when half of the pond stinks, is not enough.

However, what Zaif exchange does is not so much related to Binance doing anything wrong. They try to deflect public eyes from them to somebody bigger. They want to hide their incompetence, which is .. childish.

Basically if they confirmed that their exchange was hacked, they will be cautious already and the very first thing that a person will do for this kind of fraud is to investigate the wallet address of the recipient. I wonder why it took a long time for them to see receiving address as Binance account or report it to Binance too late. Knowing that Binance could freeze the account and investigate too to avoid the funds being withdrawn. They literally waited for the funds to be completely stolen then sued Binance for it. Is it just a possible attack to Binance?

If I wanted to make money from arbitrage trading bitcoin, I would be signing up with an FCA-regulated CFD broker and hedging on BTCUSD prices, not with a crypto exchange with little oversight and a history of security breaches while trading the same cryptocurrency you're holding your capital in, it prevents you from profiting on shorts without complex BTC <--> Tether swaps.

Good point! May they had sued Binance knowing its a losing case but hoping they will come to a settlement and ultimately recover their lost funds - assuming Binance would submit to their demand and  that is only possible if Binance will opt for a compromise but I doubt they would not do it since the case lacks merit and it could damage their reputation within the crypto-community. Imho.

So who is having fault now? Binance or the bitcoin system itself. I know that bitcoin was built for a digital or cashless transaction making it anonymously as an option for this feature but still one can find ways to get identity verified if it is needed for both parties before proceeding into the transaction. However, this issue is clearly the for binance mismanage loopholes in their system and making it clear that there is a violation in their system not getting detected or just leave that way without them apprehending the users behind this activity. Pretty that they got profit from the transaction and probably does not think no one will going after them.

I don't understand how a 2 BTC limit could be used for almost 1.5k BTC... It's, like, at least over 700 accounts to pull this off. And if the KYC really the issue here? Maybe some other rules could be enforced instead. Such as a VPN ban and obligation to share real geolocation. Making 700 accounts would be way more difficult in that case. I understand that 700 KYCs is even better for this case, but simply because some manage to abuse the system, I don't think it's fair to impose KYC on everyone. Not to mention what's been pointed out about identity theft. Lowering the limit to 1 BTC or even 0.5 BTC would make sense, but also some additional measures like geolocation or the MAC address, idk. There must be something apart from KYC that could be enforced, right?

Seriously speaking, what would Binance do when the thieves weren't so scared of going for a KYC when it's about millions of dollars and what will the victim exchange gain by trying to defame Binance over this saying that they don't meet the industry standards when it comes to KYC?

If the thieves would have already had done fake KYC over Binance and redeemed the coins into another exchange or simply went for an OTC deal? Even if they sold their coins, don't you think it's be easier for them to just get a fake bank account which is not theirs but on someone else's name? And at some places, even the bank guys are guilty because too much money is involved here, so their integrity can easily be bought.

I guess and I have doubt that will be the reason behind the scene. They know that Binance is a large exchange and most of traders use this Binance for years. The point is, why they don't report and until bitcoin was successfully withdrawn. It's obviously they want to ruin the repuation of Binance which is possible to happen because they are also against from fraudulent activity.

You guys think that if they were successfully ruin the reputation of Binance there is a chance to increase traders. It sound s like a trap.

Yeah, agree with. Everytime I read news about a person/group suing an exchange as the destination of the hacker, it looks like they want to split the bill.  ;D
Nowadays, you can buy fake accounts with KYC. I saw it on a facebook crypto group.

No, it's not fair to block an 'honest' buyer's account because of the origin but that's another matter. Was I implying that it should be blocked? I certainly wasn't thinking about that when I said they still came from the same exchange.

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Based on the links shared in this thread so far, hacker/s actually created multiple accounts.
Some of the stolen funds were also mixed.

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Their KYC protocol and withdrawal limit are just fine to me. IIRC, they even partnered with Chainalysis and Ciphertrace to improve their AML/KYC compliance. Are they partly at fault here? I'd rather leave that to the court with jurisdiction of the case.

Obviously that had to come into limelight since the total amount is about $15.2 million which is a lot. The 2 BTC unverified withdrawal limit was considered good since it helped to keep the anonymity aspect of bitcoin safe but hackers have used it to their advantage and I am quite sure now that the lawsuit is raised this limit will be removed too. Now onwards people will have to do a KYC just to create an account on Binance and I guess other exchanges will follow the suit.
Binance should have thought a work around for such an attack earlier since it is quite obvious that even if a hacker tries to create 500 fake accounts and uses 2 BTC unverified withdrawal for each account then he will be able to withdraw 1000 BTC without any KYC.

This is kinda fishy if the Binance didn't do something about it because they will surely be accountable if they allowed the hacker to exchange the money and freely cashout it. I will just hope that Binance team are not part of the hack or to what happened because they should have taken an action to it either they freeze the account or do some legal stuff in order to freeze the money and return it to the right owner.

9.4 million dollar is not a joke amount and Binance should rather check carefully all the big transactions that comes in their exchange so hackers cannot use their exchange freely and for the hackers to have a difficulty in cashing out their loot.

It looks like there would be no exchanges left that would allow users to exchange without KYC. With giving so much value and importance to bitcoin, it's sad to see an important expect of it dying. Though no one is forcing anyone to use such exchanges but when you have no means left to buy and sell your coins and your funds are all legit, you'd be compelled to give up your identity as that would be the easy way to do it.

I'm extremely surprised the way they would have divided this money into parts and had the guts to send these coins directly to Binance (as they probably knew that if they mix their coins and send them to Binance, Binance would either block or seize their coins until a KYC would have been conducted). So, no mixing services involved, how the hell were they able to transfer such a big amount to Binance without coming into limelight is what's crushing my brain atm.

If KYC gets mandatory, we'll probably see a bit drop in the number of users adopting crypto (maybe because their sole intention of using it is remaining anonymous while trading and gambling it, but if such rights will also be taken away from those users, I don't think people would use exchanges but may go more for things like uniswap and p2p).

I don't think so. As much as I constantly espouse privacy and decry KYC, I am under no delusion that the majority of people involved in bitcoin today do not share my mindset. Further, if someone is looking to get involved in crypto solely to remain anonymous, then monero is probably a better choice for them than bitcoin is. And if they do want to use bitcoin and remain anonymous, then using a centralized exchange, even without completing KYC on it, is a terrible choice.

If KYC becomes mandatory, then we will likely see a proliferation in the number of DEXs and a growth in the volume they are dealing with, which would be great for everyone who is interested in their privacy.

Let’s be sincere here, they are right though, the KYC protocols that are being used by Binance is going to be helping a lot of criminals to escape with money laundering, since they are allowing up to two BTC , it will be making it easy for these criminals to carry out their activities and escape with it.

I am not going to be surprised if Binance decides to tighten up things after this case; they might decide to start full KYC procedure especially in the US so that they wouldn’t have to get into problems. Although so many of the people don’t like KYC, but it still has to be done.

I suppose Binance's 2 BTC daily withdrawal limit don't really matter in making cyber criminals more successful in their illegal activities rather its the lack of solid security on the platform of those exchanges who don't take it very seriously hence they become easier targets for cyber criminals.

Also, those exchanges that are being compromised are complacent about their own security that I think they may be the only one to blame on why did those hacking incidents happened.

A surge on the number of newly-created accounts to take advantage of the no-KYC 2BTC limit per account would have been noticed by Binance if they were really keen into combating money laundering. In a way, Zaif has a point about Binance's counter-measures against fraud and money laundering since it's easy to get in of the said exchange and get out with tons of $$$ in your pocket without them suspecting a thing. They are a multi-million brand and they should really watch closely on these activities else they will face such repercussions already presented to them. While I don't think this case would move further, Zaif presented valid points which law enforcement would surely keep an eye on.

Tbh, I personally believe DEXs can't really match the volumes we see over centralized exchanges and even if they will, they won't be able to handle it. I used IDEX (one of the most favorite for everyone going for DEX) but even they had several issues like server fuck up, database errors (sometimes it showed coins which I never bought and possessed, while sometimes it even hide my coins that I have on that address), giving "wrong private key" errors even when it was used at the same time at MEW and even worked.

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Seriously, how's that even possible? A wave of new accounts to look after? It was 1.5k BTC, so even if 750 new accounts were made, nothing can be brought under observation as these numbers are too small compared to the daily sign ups these exchanges are getting worldwide. It'd have only been caught if thieves may have used a single place's IP address(es) while creating accounts. It wouldn't have been hard for those hackers too to gain some fake phone numbers and identity theft is not a big deal for them who hacked a whole exchange.

So, make 726 accounts, or wait 726 days, or perhaps a bit of both, have say, 10 accounts and spend 73 days doing it? What about 20 accounts and 37 days? What if they don't just use Binance but multiple exchanges with similar limits? Are they going to sue all of them?

Then you could go on and on. The Exchanges are the problem. Bitcoin is the problem, internet is the problem, computers are the problem, electricity is the problem...

It is a coincidence that hackers were careless about not putting their money in the mixer before sending it to the exchange, and Binance allowed this guy to launder his money without being stopped by Binance.
The fault is Binance because they have helped the hackers launder money. Whether intentionally or unintentionally, they must be held accountable for their actions.

If Binance doesn't change their policy about no-KYC limit being 2 BTC, I think it will continue to give headaches for the one of the strongest exchanges in the market. It shouldn't be too hard to solve these kind of problems to prevent frauds like this.

I would really want to know the outcome of this action because the judgement no matter the side would be setting a preference that would likely shape the crypto industry.

For one, if the hackers did not send the hacked bitcoin to Binance but Electrum, or Blockchain.com or any of the myriads of wallets service providers we have in the crypto space, would they sue all of them or they would focus only on the site that have KYC?.

Another question the judgement would be answering would be the responsibility of keeping the funds of users safe. Is the the original platform provider or the settling platform provider?

Binance has been operating its business legally for the past few years and I suppose there is no law or Government order yet that could prevent them from implementing that 2BTC withdrawal limit for unverified accounts.

Needless to say, its a part of their marketing strategy to attract more customers and more likely, they will not change that policy not unless ordered by concerned authorities.

They can't at the moment, simply because there isn't the desire in the community to use them. If enough people finally get fed up with centralized exchanges pulling their legalized scams and stealing their customers' coins, then DEXs will easily grow in both size and number to accommodate that.

Given that IDEX requires KYC, it cannot be called a DEX in any real sense.

As far as I am aware, there is no evidence that these were all newly created accounts (please CMIIW). Many or all of them could have been accounts that were created months or even years ago.

It is impossible to tell from an address alone which wallet was used to generate it or is being used to interact with it.

Neither. It is the user's responsibility. If you deposit those coins to a third party exchange, then they are no longer your coins.

I believe that police from wide range of countries have questions to binance operating model

Even if people get fed up with centralized exchanges and its unwrapped scams, don't you think crypto has already got something new which is working like crazy as it is all based on governance - DeFi? DeFi is already changing things a lot and these swap-machines (like uniswap, sushiswap, etc.), liquidity pools and yield farming has now taken over the game in their hands while most people are able to gain unbelievable rewards for trading there. Shall I call these swap-machines a DEX only? I don't think these come under the DEX category.


What? Really? Since when? I used it some time back and it never asked me for KYC then, didn't know IDEX started KYC'ing users.

I haven't spent a huge amount of time looking in to DeFi (so perhaps I shouldn't really comment at all), but from what I have seen, it seems to me to be exactly as you claim - unbelievable rewards and gains. Until someone can prove to me otherwise, as far as I am concerned it is essentially going to be the same as the ICO craze. A minority of lucky people will make very good returns, a lot of people will lose everything or almost everything they put in, and in a year or two 99% of the projects/coins/tokens will be dead and forgotten.

For over a year: https://medium.com/idex/idex-kyc-transition-period-and-updated-asset-availability-for-us-markets-set-to-begin-d45e945f842d

Tier 1 is a $5k daily limit, and requires name, date of birth, and country of residence. Tier 2 is unlimited and additionally requires address, photo ID, and a selfie.

No they are not, this is just an illusion the owners from that inept exchange are trying to give, they failed their customers and they are now trying to shift the blame to binance to try to hide their own incompetence and now want to recover that money not by finding the hackers that were behind the hack and are the direct responsibles of this but by trying to attack binance which has gained the trust of their customers.

It is obvious what they are trying to do, in my opinion this is an attack thought not only to try to get some money back but as a way to try to weaken our privacy, I just hope binance does not give in as many exchanges before it.