Binance sued for money laundering over stolen bitcoin.

wxa7115

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Quote from: maxreish on September 16, 2020, 12:26:40 AM

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.

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.

o_e_l_e_o

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Quote from: Stedsm on September 19, 2020, 03:28:38 AM

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.

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.

Quote from: Stedsm on September 19, 2020, 03:28:38 AM

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.

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

Quote

The transition period will end on August 23, 2019, at which time trading and withdrawals through IDEX will only be available for those who have created an account and completed Tier 1 or Tier 2 verification.

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.

Stedsm

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Quote from: o_e_l_e_o on September 19, 2020, 02:51:14 AM

Quote from: Stedsm on September 17, 2020, 08:04:13 AM

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.

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.

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.

Quote from: o_e_l_e_o on September 19, 2020, 02:51:14 AM

Quote from: Stedsm on September 17, 2020, 08:04:13 AM

I used IDEX (one of the most favorite for everyone going for DEX) but even they had several issues

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

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.

DraGonD

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

o_e_l_e_o

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Quote from: Stedsm on September 17, 2020, 08:04:13 AM

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.

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.

Quote from: Stedsm on September 17, 2020, 08:04:13 AM

I used IDEX (one of the most favorite for everyone going for DEX) but even they had several issues

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

Quote from: dothebeats on September 17, 2020, 07:24:42 AM

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

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.

Quote from: audaciousbeing on September 18, 2020, 11:02:05 AM

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?.

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

Quote from: audaciousbeing on September 18, 2020, 11:02:05 AM

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?

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

bitsurfer2014

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Quote from: DatKing on September 18, 2020, 10:45:30 AM

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.

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.

audaciousbeing

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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?

DatKing

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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.

wanted sliter

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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.

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Quote from: mk4 on September 15, 2020, 07:23:50 AM

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?

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...

Stedsm

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Quote from: o_e_l_e_o on September 17, 2020, 03:44:43 AM

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.

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.

Quote from: dothebeats on September 17, 2020, 07:24:42 AM

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.

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.

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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.

bitsurfer2014

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Quote from: wiss19 on September 17, 2020, 03:59:00 AM

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 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.

wiss19

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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.

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Quote from: Stedsm on September 16, 2020, 03:39:34 PM

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.

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Quote from: pawanjain on September 16, 2020, 11:49:51 AM

--snip--

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).

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Quote from: pawanjain on September 16, 2020, 11:49:51 AM

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.

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.

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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.

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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.

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Quote from: o_e_l_e_o on September 15, 2020, 01:33:10 PM

~
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?

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.

Quote from: Slow death on September 16, 2020, 03:05:54 AM

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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.

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

Quote from: maxreish on September 16, 2020, 12:26:40 AM

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

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.

Topic: Binance sued for money laundering over stolen bitcoin. (Read 903 times)