How Binance Helps Legal Authorities Take Down Cybercriminals Laundering Illicit Funds

According to the latest UN statistics, global money laundering transactions reach up to $2 trillion a year. A small fraction of that huge amount passes through the digital assets ecosystem, and responsible actors in it are working to bring that down even more. As the world’s leading cryptocurrency exchange, Binance has especially taken it upon itself to protect the safety and security of the virtual finance world. Here is how it helps legal authorities to take down cybercriminals laundering money.

Busting the $500 Million FANCYCAT Ring

In June 2021, Binance announced to the public that its security team has taken part in an international investigation that resulted in busting a prolific cybercriminal ring. The company cooperated in the operation with authorities from around the world including Ukraine Cyber Police, Cyber Bureau of Korean National Police Agency, US Law Enforcement, Spanish Civil Guard, Swiss Federal Office of Police, and more. The cybergang, known as FANCYCAT, has been running multiple criminal activities: distributing cyber attacks; operating a high-risk exchanger; and laundering money from dark web operations and high-profile ransomware attacks. In total, legal authorities estimated that FANCYCAT was responsible for over $500 million worth of damages in connection with ransomware and millions more from other cybercrimes.

Video of the arrests from Ukraine Cyber Police:

Research found that in a majority of the cases associated with illicit cryptocurrency flows coming onto exchanges, the exchange is not harboring the actual criminal group themselves, but rather being used as a middleman to launder stolen profits. Understanding this diagnosis, the Binance security team applied a two-pronged approach to the FANCYCAT investigation. An AML detection and analytics program detected suspicious activity and expanded the suspect cluster, and once they mapped out the complete suspect network, Binance worked with private sector blockchain analytics companies to analyze on-chain activity. Based on this, Binance found that the group was not only associated with laundering ransomware attack funds, but other illegally-sourced funds. This led to the identification and eventual arrest of FANCYCAT.

Binance’s Bulletproof Exchanger Project

In August 2020, Binance announced to the public that suspicious activity detected and analyzed by its team led to the identification and arrest of a cybercriminal organization responsible for a ransomware campaign and the laundering of more than $42 million in cryptocurrencies over the previous two years. Binance took part in that operation in collaboration with the Cyber Police of Ukraine.

This development came after Binance allocated extra resources in early 2020 for its security researchers to probe the ways criminals were laundering money through “Bulletproof Exchangers” – cryptocurrency platforms often serve as the cash-out points for cryptocurrency operations connected to financial crimes and other fraud. Bulletproof Exchangers are well-known for their lenient know-your-customer (KYC) and anti-money laundering (AML) policies. Data analysis showed that these exchangers, which are often based in regions with a lack of enforcement or regulation, have a high proportion of transaction volume linked to high-risk categories such as ransomware attacks, exchange hacks, and darknet-related activities.

These examples show that Binance means business when it comes to aiding authorities in the global fight against money laundering. It has already committed its resources, manpower and expertise to this cause, which resulted in the arrests of criminals responsible for hundreds of millions of dollars in damages. And as the world’s leading cryptocurrency exchange, it is uniquely situated to help tackle cybercrime using its big data capabilities, industry partnerships and much more.

To learn more about everything the world’s leading cryptocurrency exchange is doing to protect the safety and security of the ecosystem, follow the Binance Blog.