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A major drug cartel used the Binance cryptocurrency exchange to launder money. Now Binance is being investigated for money laundering

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is money safe in binance

Binance is being investigated for money laundering. According to Forbes, a U.S. Drug Enforcement Administration (DEA) investigation revealed that an international drug cartel used the largest trading cryptocurrency exchange Binance, to launder large sums of illegally obtained money. According to law enforcement estimates, the amount of such funds could be up to $40 million.

In the report it’s said that it was a criminal organization, involved in trafficking drugs (mainly methamphetamine and cocaine) and operating in different countries and parts of the world, including the U.S., Mexico, Europe and Australia. They may have even used BUSD to do this. But there is no word yet on that.

According to DEA investigators, the criminals used Binance to launder illicit proceeds, having spent from $15 million to $40 million through the trading platform.

According to a search warrant accessed by the publication, the investigation began in 2020. At the time, the DEA had a tip on a certain user who was exchanging cryptocurrency for fiat. He attributed the origin of the money to income from family restaurants and livestock farms.

After a period of tracking cash couriers and checking the suspect, law enforcement arrested him in 2021. He pleaded guilty to money laundering and drug trafficking.

According to Forbes, Binance representatives actively cooperated with authorities to help them track the criminal scheme. This, as well as the actions of an undercover agent, made it possible to trace the transactions and the account used to launder money.

According to the warrant, the owner of this account made 146 cryptocurrency purchases in 2021 worth more than $42 million and sold more than $38 million through 117 sell orders. The DEA estimated that at least $16 million of those proceeds were drug proceeds.

Also, tracking the cybercriminal’s online activity helped identify another address linked to him, and his identity was identified through information provided by Binance.

It is reported that DEA informants are currently present on various trading platforms such as localbitcoins.

Is money safe in Binance?

Binance CEO Changpeng Zhao has already commented on the story, writing on Twitter:

“Crypto, unlike cash, is not suitable for illegal activity. Blockchain is transparent.”

Earlier in May, Binance blogged about its cooperation with the DEA. At that time, exchange representatives said that they had helped identify more than 100 addresses associated with drug dealers.

However, now the exchange itself is threatened to face an investigation. As it became known in December, U.S. authorities are preparing to accuse Binance, as well as its management (including founder Changpen Zhao), of money laundering and financial irregularities. However, the timing of the formal charges remains unclear as the DOJ is split over the prosecution of the exchange.

Previously, we reported on auditors getting in the SEC’s crosshairs and why they don’t want to work with cryptocurrency exchanges.


Cryptotraders lost more than $250,000,000 in liquidations after Fed rate hike

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Crypto traders lost

Cryptotraders had a tough day: almost 68,000 positions were liquidated on exchanges in the last 24 hours, and the total volume of liquidations exceeded $257,000,000. All this happened against the news of the US Federal Reserve’s rate hike and another Securities and Exchange Commission regulatory action against cryptocurrencies.

Cryptotraders lost $132,000,000 in BTC

Bitcoin, Ethereum, and Ripple were the leaders in the number of forcibly closed positions. BTC liquidations totaled almost $132,000,000; Ethereum traders lost $51,000,000. XRP positions accounted for about $8,000,000 of liquidations. Bitmex exchange executed the largest order of $7.39,000,000.

Cryptocurrency market capitalization has declined 2% in the last 24 hours, but is still above the $1 trillion mark.

The weekly CoinShares report also recorded a massive outflow of funds for six consecutive weeks. During that period, nearly $500,000,000 was withdrawn from cryptocurrency platforms, with $113,000,000 coming from bitcoin. Analysts at the company believe the outflow is due to liquidity needs during the banking crisis rather than a negative outlook. The company mentions that a similar scenario was seen in March 2020 amid a COVID-19-induced panic.

Regulators continue to hunt the cryptobusiness

Another reason for the increased volatility in the market has been harsh action from U.S. regulators. Last night it became known that the U.S. Securities and Exchange Commission sued cryptomagnate Justin Sun, accusing him of fraud and market manipulation.

The SEC also issued a notice of wrongdoing against Coinbase, the largest U.S. cryptocurrency exchange. The securities regulator sued Coinbase Global Inc, for some of the products it offers.

We previously reported that Bitcoin (BTC) tests $28,000, but onchain metrics urge caution.

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Binance was caught circumventing KYC to register Chinese clients

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Binance China customer registrations

Employees of the cryptocurrency exchange Binance help clients from China to bypass compliance and verification. CNBC writes about it, citing hundreds of corporate emails from exchange employees on Discord and Telegram. It is reported that Binance has helped over 200,000 users register, bypassing its own security system. One case describes correspondence between a user from China and a Binance employee.

The employee under the pseudonym yaya.z suggested the user from China turn on a VPN, register as a Taiwanese resident and then return the location to China. Binance employees also advise customers not to use VPN services from the U.S., Hong Kong and Singapore, because the exchange does not provide services in those regions, writes CNBC. At the same time, Binance freely processes applications from U.S. email providers like Gmail or Outlook for registration.

The exchange even offers specialized mobile applications for customers from China. A CNBC reporter could download a special mobile application from Binance via email. At the same time, no VPN was needed to download the app, as the download was conducted through the domain of binance[.]com. It is also alleged that the exchange still verifies users with Chinese phone numbers.

An exchange spokesperson denied the existence of a special Chinese version of the mobile application. The exchange also added that it has improved the system to identify users from banned regions. CNBC notes that after providing evidence, Binance removed employee messages from corporate chats to circumvent KYC.

We previously reported that the Ethereum (ETH) price crossed the $1,800 mark, opening the way to $2,000.

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Why cryptoanalysts expect bitcoin to fall

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cryptoanalysts expect bitcoin to fall

The market remains in a bearish trend and bitcoin (BTC) will resume its fall and test $16,000. There are two reasons:

  • Altcoins are near serious resistance;

  • The BUSD and USDC stablecoins are manipulating the market.

The first statement can be confirmed or disproved by a technical analysis of the cryptocurrency market, but there is not enough additional information for the second.

The market capitalization of altcoins (ALTCAP) does hold nearly $605 billion of resistance. Although ALTCAP has risen above it several times, it didn’t develop above this area.

However, the daily RSI has broken through the bearish divergence trendline (green line). Such a breakout often precedes significant reversals into a bullish trendline. As a result, ALTCAP will move higher towards the $680B resistance area. If not, ALTCAP could fall back to the $518B support area.

There are also those who argue that bitcoin will test the $10000-$11000 area because there is a CME price gap that needs to be filled. The gap refers to the difference between the closing price of bitcoin futures on the Chicago Mercantile Exchange (CME) on Friday and the opening price on the following Monday.

We previously reported that Hong Kong has allocated another $50,000,000 to the crypto industry.

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