Binance sued for money laundering over stolen bitcoin.

[xtraelv]

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.





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

[mk4]

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?

[sheenshane]

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.

[mk4]

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

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.

[ILuckyGuyI]

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.

[todiefor17]

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.

[jubalix]

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

[john_nautica]

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?

[logfiles]

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?

[Traderbtcc]

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.

[BrewMaster]

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.

[eaLiTy]

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.

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.

[o_e_l_e_o]

Correct me if I'm wrong, but assuming that the 1,451 BTC came from one wallet address

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

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.

Completely this. It is very similar to the Cashaa hack 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.

[Argoo]

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.

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.

[ChiBitCTy]

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)

[seoincorporation]

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.

[Slow death]

A very strange story, maybe Binance is still involved in this scheme?

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


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

[Bttzed03]

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.

~
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

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. 

[o_e_l_e_o]

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.

There needs to be much more strict oversight..

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.

[stompix]

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.

Completely this. It is very similar to the Cashaa hack 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!

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.