Following a June 6 Reuters report which allegedly linked Binance to money laundering schemes involving the top darknet and hacking groups, some members of Binance’s compliance team have cleared the air on the allegations, highlighting some extra efforts put into compliance exercise and how this high scrutiny has also cost the exchange a fortune.
“Binance is better or the same as most exchanges” – Gambaryan on KYC implementation
In an interview with CoinDesk on August 1, three members of the team overseeing Binance’s compliance exercise – Tigran Gambaryan, Matthew Price, and Chagri Poyraz – noted some of these extra efforts and addressed the allegations brought on the exchange.
When asked about Binance’s alleged connection with Hydra – the world’s largest darknet drug marketplace – Matthew Price pointed out the error in claiming Binance was nonchalant about its compliance effort or that the exchange endorsed the criminal activities. “It’s like saying that Bank of America supports money laundering for drug cartels,” Price said.
Tigran Gambaryan supported Price’s opinion. He noted that the exchange, as well as all other payment facilitators, cannot control what goes into the user’s wallets, stating that their powers lie in the actions after that.
“When Indian scammers ask people to get Apple gift cards, does that mean Apple is now laundering hundreds of millions of dollars? No,” Gambaryan added, pointing out that Binance is widely used because most scammers resort to the cheapest options and Binance is one of the cheapest.
The team members’ opinion on how Binance compared to other exchanges regarding criminal activity was sought. In response, Gambaryan noted that the large volume Binance transacts in could lead to the accidental processing of more illegal money, further stating, “Binance is better or the same as most exchanges.” Gambaryan also pointed out that they operate in different jurisdictions as a challenging factor.
Binance has lost 90% of customers following KYC implementation, costing billions in revenue
Binance reduced the withdrawal limit for non-KYC accounts from 2 BTC to 0.06 BTC in July of 2021 following concerns raised. The team was asked to share if a notable decline in illicit activity was witnessed afterwards.
Gambaryan noted that they did witness a good drop but also a drop in deposits, adding that he commissioned a study to ascertain the real rate. “There’s a huge difference [in amount of illicit activities], not only in deposits if you look at a total percentage in transactions,” he said.
Gambaryan said that there is no evidence that says Binance is a den of criminal activity, and that’s what he wanted the world to be aware of. Speaking further on this, Chagri Poyraz, noted that they ought to be putting this out there more often, but that move would just be tipping other criminals off.
Citing an example, Poyraz recalled how Binance cut off business ties with Garantex, an Estonia-based exchange that US authorities sanctioned for facilitating transactions in laundered funds. Poyraz noted that this move came a month before the exchange was officially sanctioned. “There are other exchanges that continue to do business with them,” Poyraz added.
Poyraz further mentioned that they had lost 90% of their customers following the implementation of KYC procedures, leading to them losing billions in revenue.
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