government agencies to track illegal flows, concluded in a 2020 report that Binance received criminal funds totalling $770 million in 2019 alone, more than any other crypto exchange. Separately, crypto researcher Chainalysis, hired by U.S. Two industry experts reviewed the calculation and agreed with the estimate. “Binance had no idea who was moving money through their exchange.” Robert Auxt, co-founder of Eterbaseĭuring this period, Binance processed transactions totalling at least $2.35 billion stemming from hacks, investment frauds and illegal drug sales, Reuters calculated from an examination of court records, statements by law enforcement and blockchain data, compiled for the news agency by two blockchain analysis firms. “Binance had no idea who was moving money through their exchange” because of the anonymous nature of the accounts, said Eterbase co-founder Robert Auxt, whose firm has been unable to locate or recover the funds.Įterbase’s lost money is part of a torrent of illicit funds that flowed through Binance from 2017 to 2021, a Reuters investigation has found. In as little as nine minutes, using only encrypted email addresses as identification, the Lazarus hackers created Binance accounts and traded crypto stolen from Eterbase, the Slovakian exchange, according to account records that Binance shared with the police and that are reported here for the first time. Several hours later, the hackers opened at least two dozen anonymous accounts on Binance, the world’s largest cryptocurrency exchange, enabling them to convert the stolen funds and obscure the money trail, correspondence between Slovakia’s national police and Binance reveals. It was one of a string of cyber heists by Lazarus that Washington said were aimed at funding North Korea’s nuclear weapons programme. The failed Signature Bank's 24/7 payment tool, Signet, which was a key financial conduit for the crypto industry, is a white-label product made by an enterprise blockchain firm.In September 2020, a North Korean hacking group known as Lazarus broke into a small Slovakian crypto exchange and stole virtual currency worth some $5.4 million. The Winklevii made a $100 million loan to Gemini from their personal fortunes after their troubled firm failed to raise outside funding. The feature is only available to subscribers-please consider supporting Fortune’s quality business journalism. That said, the tale of the forces behind Binance’s remarkable rise is well worth a read. After all, the most recent great narrative in crypto-about a Stanford-born whiz kid who believed in effective altruism-fooled all of us badly. It’s not hard to imagine how such an experience could shape a future CEO.Īs I said, Zhao’s life and career are a nice story-though one that should not inform our opinions about Binance and its controversial business practices. If you want to add a psychological layer to the story, Zhao conveyed a sense of pain when recounting to us how his aloof father didn’t attend a single one of his volleyball games. Zhao told me that his father’s experience-along with reading the personal finance bestseller Rich Dad Poor Dad-taught him to seek a different path. Despite being a brilliant academic, the senior Zhao remained on the periphery of the university world due to the oppression he encountered during the Cultural Revolution, and then later due to his poor English skills. The other big factor that shaped Zhao is that same father.
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