Binance Allowed Suspicious Accounts to Move Millions After $4.3B US Deal

TLDR

• Binance processed $1.7B in transactions, including $144M post-plea agreement.
• 13 suspicious accounts flagged for illegal activities moved funds even after Binance’s settlement.
• Binance’s governance upgrade raised doubts due to ongoing suspicious activity.
• Binance’s 2023 settlement followed the failure to report over 100,000 suspicious transactions.

Despite agreeing to tighten controls as part of a $4.3 billion US criminal settlement in November 2023, Binance reportedly allowed suspicious accounts to continue transferring millions in crypto. A network of 13 high-risk accounts processed over $1.7 billion in transactions, with some even moving funds after the plea agreement. This raises fresh concerns over the effectiveness of Binance’s promised governance and surveillance upgrades, questioning its commitment to compliance.

Binance Let Suspicious Accounts Move Millions After $4.3B US Plea Deal

Binance, the world’s largest cryptocurrency exchange, reportedly allowed suspicious accounts to continue transferring large sums of money after its $4.3 billion plea agreement with US authorities in November 2023.

Internal data analyzed by the Financial Times shows that 13 accounts, flagged for suspicious activity, processed about $1.7 billion in transactions. Notably, around $144 million of this was transferred after Binance had committed to enhancing its controls as part of the criminal settlement.

Despite the exchange’s promises to tighten governance and surveillance measures, questions remain about the effectiveness of these actions. The network of 13 accounts was involved in transactions with links to high-risk regions such as Venezuela, Brazil, Syria, and China. These activities were highlighted in internal documents, including Know-Your-Customer (KYC) records, device logs, and transaction histories.

Suspicious Account Behaviors Raise Concerns

Among the flagged accounts, one was associated with a Venezuelan woman who received over $177 million over a two-year period. What raised red flags was the fact that this account altered its linked bank details 647 times in just 14 months. Experts from the Financial Times commented that such frequent changes, especially under these circumstances, were unusual and pointed to potential illegal money-moving operations.

Another account, held by a junior bank employee in Caracas, saw around $93 million in transactions. Interestingly, the internal logs indicated that the account was accessed from Caracas and Osaka, Japan, within a span of less than 10 hours, a sequence that experts argue is physically impossible. This type of anomaly typically triggers an automatic review at any regulated financial institution.

The continued activity of these accounts, even after the plea agreement, points to systemic issues in Binance’s monitoring systems. Experts note that red flags should have prompted further investigation, especially with the volume of suspicious activity detected.

Binance’s Promised Oversight Reforms in Question

Following the criminal settlement with the US government, Binance committed to implementing stronger measures for detecting suspicious transactions. This included real-time monitoring, enhanced due diligence processes, and regular reviews of customer accounts. However, despite these promises, ongoing suspicious activity raises questions about whether Binance is effectively fulfilling these commitments.

Regulatory specialists cited by the Financial Times have raised concerns about Binance’s ability to make the necessary improvements. One expert explained that when suspicious accounts continue to move large sums of money without intervention, it suggests the exchange’s governance framework is either inadequate or not functioning as promised.

The accounts in question also received substantial sums of stablecoin USDt, which were later linked to wallets frozen by Israeli authorities under anti-terrorism laws. This further exacerbates concerns that Binance may be inadvertently facilitating illegal financial activities.

Binance’s Legal Commitments Under Scrutiny

The $4.3 billion criminal settlement marked a significant turning point for Binance, following revelations that the exchange had failed to report over 100,000 suspicious transactions. These transactions were connected to illegal activities such as ransomware, drug trafficking, and transfers linked to terrorist groups including al-Qaeda and ISIS.

The settlement also involved an agreement for Binance to enhance its internal controls to comply with anti-money laundering (AML) and Know-Your-Customer (KYC) regulations.

Despite these promises, Binance’s inability to immediately address the suspicious activities highlighted in the Financial Times report raises doubts about the true effectiveness of its compliance efforts. The continuation of high-risk transactions points to ongoing challenges in the exchange’s ability to monitor and control illicit activities, even after its settlement with US authorities.

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