Binance Teams with CipherTrace to Double Down on AML Protections

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Binance, the cryptoeconomy’s most popular cryptocurrency exchange, has partnered with CipherTrace, one of the space’s leading blockchain security and analytics firms, to give a further boon to its platform’s anti-money laundering practices.

Binance Cyphertrace

With an eye toward fostering superior trust among all of Binance’s stakeholders, Binance Chief Compliance Officer Samuel Lim said CipherTrace would now serve as the exchange’s “on-chain security solution.”

The Californian firm offers a suite of blockchain forensics tools and services that allow its customers to analyze cryptocurrency transaction flows, e.g. for identifying hacked or laundered funds.

CipherTrace CEO Dave Jevans, who was recently qualified as Canada’s first Bitcoin expert witness in a dark web court case, hailed the Binance collaboration as progress toward the cryptocurrency ecosystem hitting the mainstream:

“As one of the most trusted cryptocurrency exchanges on the globe, Binance is leading the way in AML compliance programs for the industry. With regulators in the world’s most progressive jurisdictions that encourage innovation also using CipherTrace to assess and monitor risks of licensed cryptocurrency businesses, we are looking forward to helping the crypto economy grow by raising the level of transparency and trust in the overall market. We expect many others to follow Binance’s lead and are excited to help pave the path.”

The partnership will have a boosting effect, as it comes after Binance’s compliance program has already made high-profile freezes of illicit transactions in the past. For example, in the wake of the Cryptopia exchange hack earlier this year, Binance was able to freeze some of the stolen crypto accordingly.

And as for CipherTrace, the partnership with the cryptoverse’s largest exchange by trade volume is another win for the firm in what’s already proven to be a successful 2019 for the blockchain sleuths. The company raised $15 million USD in venture capital in February and began providing its services to the Malta Financial Services Authority in March.

AML Compliance in Spotlight After Bittrex BitLicense Denial

AML compliance is crucial for cryptocurrency exchanges that want to expand, not shrink or isolate, their operational presences.

U.S. cryptocurrency exchange Bittrex found itself on the wrong end of that dynamic this week after the New York State Department of Financial Services (NYDFS) denied the exchange a BitLicense, the license crypto enterprises are required to have to operate in New York, on the grounds of AML concerns.

To that end, the NYDFS said in a letter to Bittrex CEO Bill Shihara that the exchange had failed to “demonstrate that it will conduct its business honestly, fairly, equitably, carefully and efficiently” under New York law. Going forward, Bittrex will have to cease operations in the state and then reapply for a BitLicense in order to come back.

Bittrex itself quickly responded to the rejection, issuing a rebuttal post that disputed the crux and lack of context of the NYDFS’s denial. The exchange also said it was determined to continue advancing in spite of the set back:

“We will continue to work with the many other regulators, and we will continue to take constructive feedback to improve our ability to be the corporate citizens we have set out and committed to be.”

Conversely, the episode highlights the value proposition of companies like CipherTrace and Chainanalysis.

New Reports Suggest AML Industry Set for Robust Growth

Research and Markets have released a new report that forecasts the AML software market as being set to grow to the size of nearly $5 billion by 2017.

Why that’s the case, at least where the cryptoeconomy is concerned, is no mystery. CipherTrace’s fresh Q4 2018 AML report found that $1.7 billion in stolen crypto required laundering as of the end of last year.

As such, the blockchain analytics industry will certainly be primed for action in the years ahead.


William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Bitcoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

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