May 3, 2025
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Binance discloses financial losses due to launch of KYC procedures

  • August 1, 2022
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Cryptocurrency exchange Binance has lost “about 90% of its customers and billions of dollars in revenue” due to its launch. KYC. This was stated in an interview with

Binance discloses financial losses due to launch of KYC procedures

Binance discloses financial losses due to launch of KYC procedures
Binance discloses financial losses due to launch of KYC procedures

Cryptocurrency exchange Binance has lost “about 90% of its customers and billions of dollars in revenue” due to its launch. KYC. This was stated in an interview with CoinDesk by representatives of the exchange compliance team.

According to them, in July 2021, Binance introduced withdrawal limits for unverified users. Therefore, the daily withdrawal limit has dropped from 2 BTC to 0.06 BTC. This was done to combat money laundering and reduce illegal activities, but it directly affected the number of users and the company’s revenue.

Representatives of the compliance team denied that Binance CEO Changpeng CZ Zhao ignored calls for a free KYC policy and anti-money laundering.

“I know for sure that CZ made decisions that cost Binance a lot of money. We deleted accounts with millions of users due to risk-based decisions. “It cost billions of dollars, but he supported the move,” said Tigran Ghambaryan, Binance Vice President of Global Intelligence and Investigations.

Reuters recently published a series of reports linking Binance to illegal activities. In particular, one of the articles drew attention to the exchange’s deep connection with the Russian-language darknet market Hydra. According to the agency, the platform has processed $780 million worth of Hydra-related payments since 2017.

Matthew Price, the exchange’s senior research director, acknowledged Hydra’s scale in an interview with CoinDesk. But he said Reuters’ allegations regarding Binance’s affiliation are the same as claiming that Bank of America supports money laundering for drug cartels.

According to Gambaryan, the criminals chose Binance because it was the “easiest and cheapest way.” He emphasized that the exchange cannot control the incoming money, but can monitor its further movements. At the same time, the use of a VPN will not interfere with user identity.

Price added that illegal activity is tracked through transaction monitoring, so “dirty money circulates offline, outside of the exchanges.” This is where KYC comes to the rescue.

The compliance team also commented on reports published by Reuters that Binance continued to serve Iranian customers while circumventing US sanctions and a ban on doing business in that country.

In terms of sanctions, it does not pose a problem for Iranian citizens living outside the country. OFAC. US sanctions can only be applied under US law. It is illegal to give them to Iranian citizens living abroad,” said Chagri Poyraz, global head of the enforcement of sanctions.

Gambaryan emphasized that Binance is not a legal entity in the USA and operates in various jurisdictions. The exchange takes a conservative approach and complies with US sanctions, although it is against EU law.

Recall that in 2021, financial regulators in the Netherlands, Italy, Poland, Japan, Thailand, Hong Kong, Singapore, South Africa and many other countries issued warnings to investors about the company’s activities.

Against this backdrop, Zhao published an open letter outlining Binance’s plans to ensure compliance and protect customers.

In August of the same year, the exchange launched mandatory user verification and invited former US Treasury Department investigator Greg Monahan to the position of anti-money laundering officer.

In an interview with Bloomberg in November 2021, Changpeng Zhao said that amid tightening KYC requirements, Binance lost only 3% of users.

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Source: Fork Log

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