Binance, which is a crypto exchange based in Malta, is embarking on a multi-pronged push in order to boost the compliance procedures all over its platform. To that end, the crypto exchange is announcing another partnership with CipherTrace, which is a blockchain analytics firm, to enhance AML or anti-money laundering processes such as tracing the source of on-chair funds, as well as matching the user IDs to problematic wallet addresses.

Building the compliance team

The head of compliance at Binance, named Samuel Lim, said that they are going to continue to develop their compliance team, and continue to re-invest in the compliance space as well.

The partnership with CipherTrace, which is actually backed by venture firms like Galaxy Digital of Mike Novogratz, comes on the heels of a new collaboration with IdentityMind on KYC or know-your-customer compliance.

Besides CipherTrace, Binance is also working with Refinitiv, or formerly the financial risk division of Thomson Reuters, then Chainalysis, and the BTI or Blockchain Transparency Institute, according to Lim. He said that they want their users to have the best possible trading experience, and know that they are secure that they aren’t trading with bad actors and crooks.

Wash trading happening with niche token pairs

Whitestream, which is an analytics firm, identified a Binance account which allegedly received Bitcoin from some supports of the military-political group Hamas, which the United States suggests to be a terrorist organization. Most of the experts agreed that cases like that are sporadic.

Financial crimes are a more common reputational risk, mainly taking into consideration the reg tech startup, called Confirm, identified Binance as an exchange which may not always enforce restrictions which are base on KYC requirements.

Along these lines, another report from BTI released this week also found that even though Binance trading volumes were more than 85% authentic, some wash trading, which is the practice to buy and sell the same assets at the same time, in order to create the illusion of market activity, was happening with niche token pairs.

The partnerships enhance the capabilities  

So, the development director of BTI, named Marco Paez, said that his research firm works with Binance to crack down on wash trading. Coupling the BTI insights with the services of CiperTrace could complement the broader compliance push across the Binance ecosystem.

But Lim even said that these partnerships are merely enhancing the existing capabilities of Binance, adding the exchange already has an in-house team with a lot of legal and blockchain analytics experts who are actually devoted to some tasks such as platform moderation, KYC and AML compliance.

Indeed, he said that the compliance team of Binance is committed to raising the bar as the regulatory landscape continually and user behaviors also include. He noted that compliance is always a quest, and people are still on the journey to improve their compliance.


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