Binance X Chainalysis “Securing the Future of Crypto”: Event Summary
On September 12, Binance and Chainalysis co-hosted “Securing the Future of Crypto: Compliance and Collaboration” in Seoul.
Compliance and Collaboration
In markets where absolute reliability is required, there have been many incidents of untrustworthy activities, such as exchange hacks, investment scams and money laundering cases. Consequently, there is a need for crime investigation, crime prevention and compliance. In fact, such measures have been around for some time and have recently been brought into the spotlight. Compliance and collaboration are the means to secure the future of crypto and its synergies with the traditional financial industry.
Crypto Crime Trends in 2023: Chainalysis
According to Alec Zebrick, APAC Manager of Investigations and Special Programs at Chainalysis, the scale of ransomware crimes has increased by 10.3% while the scale of virtual asset-related scams and hacking crimes has decreased by 45.2% and 23.5%, respectively, this year. Until June this year, the amount of virtual assets stolen through ransomware attacks has reached $400 million, putting this year on track to become one of the largest years for ransomware payments in history.
As a reason for the increased ransomware attacks, Alec mentioned ‘Big Game Hunting’, meaning ransomware attacks are now targeting institutions with sufficient financial capability. Because ransomware actors request payments in crypto – primarily bitcoin – it is important that private and public sectors collaborate to prevent virtual asset-related crimes.
Enhancing Security and Integrity in the Virtual Asset Ecosystem
Jarek Jakubcek, Head of Law Enforcement Training at Binance, discussed how we can build confidence and trust in the ecosystem. In the session, he shared some detailed activities Binance is doing to work closely with law enforcement agencies. The Binance Investigation team voluntarily complies and works closely with law enforcement agencies around the world to provide practical assistance and to do it fast - faster than other cryptocurrency or even traditional financial companies.. Also, the team delivers training to law enforcement agencies globally, with more than 70 training sessions offered so far in 2023.
Jarek mentioned that Binance not only answers and provides information for requested inquiries for law enforcement agencies but also provides frequent assistance to seize criminal proceeds. There have been many seizures, grabbing headlines, that were, behind-the-scenes, supported by Binance.
Scams are a highly profitable type of crime that can be easily executed with minimal costs or technical skills. Also, crime methods can vary from simple to complex, but they are getting more sophisticated year after year. This is why the collective efforts of private sectors like Binance and Chainalysis and public sectors like the Korean National Police Agency (KNPA) and other law enforcement agencies is not just beneficial - it is an absolute necessity.
Exploring Dynamics in the AML Landscape
Jarek Jakubcek and Alec Zebrick discussed global AML trends during one of the panel sessions that was moderated by Seokbin Yoon, a Professor at the Graduate School of Information and Technology at Sogang University.
Jarek shared his experience in the cryptocurrency industry from 2013, when compliance at exchanges was either non-existent or in a nascent stage. This has been a subject to a significant change, with many exchanges have implemented mandatory KYC and other measures to fight criminal activity. Another trend he mentioned is a greater focus on KYT (Know Your Transaction) - not only knowing the customers but also knowing the origin and destination of the funds.
According to Alec, one of the recent global AML trends was that scammers brand themselves and use custom infrastructure and private wallet collections to expedite laundering.
Importance of Collaboration Between Different Sectors
In the second panel, along with Jarek and Alec, KNPA investigators Minjae Kim and Soopyung Lee joined to address the importance of collaborative investigations between law enforcement agencies and private companies like Binance and Chainalysis.
Minjae Kim said that Binance and KNPA worked together on several cases that resulted in apprehensions. She also added that parties involved in investigating financial crimes should be able to get together quickly. In that sense, a standardized framework for collaboration would be helpful. Soopyung Lee agreed to this while saying that there are collaborative efforts already in the industry; law enforcement agencies and companies like Binance and Chainalysis can keep working together to build up a system.
Law enforcement agencies analyze cash flow with tools like Chainalysis and work with exchanges like Binance to investigate. Jarek mentioned that quick and practical communication with law enforcement agencies is key and added that assistance Binance provides goes beyond responding to law enforcement requests. We also take a proactive stance, reporting incidents of potentially serious child exploitation, terrorist activities, or other criminal activities to law enforcement agencies globally.