Binance Accused of Being a Money Laundering Haven, SEC Investigating Binance US, Platform Token BNB, Binance Responds with Major Actions

Binance was accused by two major media outlets, Reuters and Bloomberg, of being involved in money laundering and selling unregistered securities BNB in a single day. In response, Binance released a lengthy statement on June 1, emphasizing that the former intended to label the cryptocurrency space as a "haven for money laundering" and disclosed the conversation records with the journalist. As for the latter accusation, CZ only hinted on Twitter that the report was from last year.

Reuters Accusations

Reuters published a lengthy report titled "How Crypto Giant Binance Became a Center for Hackers, Fraudsters, and Drug Dealers," alleging that Binance has been used as a money laundering channel over the past five years, handling at least $2.35 billion, with lax reviews before mid-2021. It includes instances of North Korean hacker groups and the dark web exploiting its services.

The highlights include:

• The Lazarus hacker group laundered $5.4 million through Binance to fund North Korea's nuclear weapons program.
• Binance processed at least $2.35 billion in money laundering transactions, including hackers, investment scams, and drug sales.
• Citing a Chainalysis report, it stated that in 2019 alone, Binance handled $770 million in criminal funds.
• Binance only slightly complied with anti-money laundering regulations before mid-2021, enforcing KYC for both new and existing users after August.
• The largest dark web, Hydra, transacted over $780 million through Binance.

Binance's Response to Reuters

• Citing a Chainalysis report, only 0.15% of transactions are related to illicit activities.
• Referring to United Nations data, fiat currency's illegal transactions account for 2-5%, approximately two trillion US dollars.
• Binance has verified with Chainalysis, stating that the journalist lacks an understanding of data and blockchain principles, and Chainalysis has not publicly responded.

Binance stated that all exchanges are related to Hydra and that traditional banking institutions are more involved in funding Hydra's operations. Without the cooperation of exchanges and the traceability of blockchain, the Hydra case may never be resolved. However, international media not only failed to commend Binance but also claimed a direct relationship between Binance and Hydra.

CZ: A Time-Wasting Report

CZ tweeted about the Reuters interview questions, providing individual responses and stating that the Reuters report is biased, misleading, and a waste of time.

In the article, Binance requested to engage with the reporter and two senior operatives, Tigran Gambaryan and Matt Price, who were involved in the Silk Road investigation, and provided specific addresses for several allegations in the report, including:

• Between 2017 and 2022, Binance processed at least $2.4 billion in illicit transactions.
• From 2017 to 2022, Binance acted as a money flow channel for $780 million worth of drug transactions by Hydra.
• Being a money laundering channel for the scam platform Grandefex.
• Involvement in the Monero money laundering case of Brandon Ng, a U.S. software consultant.
• Follow-up money flow after the hack of the Eterbase exchange.

Binance emphasized that they have been in contact with Chainalysis, but Chainalysis does not support the data cited by Reuters.

SEC Investigating BNB?

As usual, Bloomberg cited anonymous sources claiming that the SEC is investigating whether Binance's platform token issued in 2017 through an ICO falls under the category of securities. The SEC has declined to comment on this matter.

The report stated that the SEC's investigation focuses on:

• Whether employees engaged in insider trading?
• Is Binance.US independent from international exchanges?
• Whether Binance operates as a market maker? And the business relationship with Binance.US?
• If U.S. citizens participated in the BNB crowdfunding, the SEC can use this as a basis.

A Binance spokesperson told CoinDesk that they will strive to meet the requirements set by regulatory agencies; CZ retweeted a user's tweet, hinting that such significant news had surfaced a year ago.

It is noteworthy that most tokens fall under the category of securities, and exchanges acting as market makers have been emphasized by SEC Chairman Gary Gensler in the past.

Additionally, Binance announced a $200 million investment in Forbes this year, and Reuters reported that Forbes has abandoned its IPO, with a spokesperson stating that Binance's investment case will fall through as a result.