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Oct 14
2020
When Funds Go Missing: How We Helped a Binance User Track And Recover Nearly $30,000 in Stolen Funds

“In the past half month, I went through a lot of dramas, and it was like riding a roller-coaster. I could never imagine fund loss due to absconding would ever happen to me. And I was even more shocked when I was informed that my lost funds were recovered. Thank you, Binance.”

Each year, cybercrimes account for billions of dollars in financial losses. Earlier this year, we helped identify a cybercrime group that was responsible for a $42m money laundering operation. According to a 2019 report from Accenture, the average cost of cybercrimes has increased 72% over the past 5 years, and the majority of cases go unsolved. 

That’s why, when a crypto enthusiast (who prefers to be anonymous) approached us asking whether we could help recover 200,000 yuan (nearly $30,000 USD) that had vanished overnight, he knew that the chances of recovery were slim. “My expected chance of fund recovery was 0.1%,” admitted the user. 

Days earlier, the user had identified a liquidity mining project that offered attractive interest rates. After a few days of research and deliberation, the user, along with a friend, decided it was time to deposit some of their funds into this project. Things didn’t go as planned. 

“I just wanted to earn high yields in a short time so that I can spend them. And I didn’t realize it was the beginning of a disaster.”

The next morning, the user woke up early and decided to check the project’s website for updates. They were shocked to see that the website was no longer accessible. Even worse, the project’s social media handles had been deleted. Having worked in traditional finance, the user believed they were “more or less experienced” with the crypto market. “I could never imagine fund loss due to absconding would ever happen to me.”

As the crypto space grows, new projects enter the market on a daily basis. With thousands of projects all competing for market share, it can be hard for crypto users to assess which projects offer users real value. The recent rise of techniques like yield farming have only compounded this problem. Though the DeFi, or decentralized finance, space is filled with innovative borrowing and lending protocols that offer users high returns, some projects can put users at risk. Therefore, it’s important for crypto users to recognize common scams and do their own research before investing in a new project. Our research team, for instance, offers a source of unbiased information, including a database of project reports on many of the industry’s top initiatives. 

Once the crypto users realized that they were the victim of an exit scam, they acted quickly, and parsed through Telegram groups and online communities for other people who had also been scammed. An online group quickly emerged, and shared information in an attempt to track and apprehend the owners of the project. 

“I discovered a very detailed capital flow diagram made by a user from Singapore, which showed that the funds had gone to 10 Binance addresses.” That was when the user decided to contact our customer support center. All told, we received messages from multiple users informing us about the misappropriated funds, along with police records, corroborating documents, and other information that verified the veracity of their reports. 

With incontrovertible proof in place, we acted quickly to lock the funds from the 10 suspicious addresses. 

“The timely fund locking later proved to be the key for our fund recovery.”

Once the funds were locked, we then moved to help users recover the stolen funds. At Binance, security is always a top priority. Just last month, we committed to doing what we could to assist those in the crypto community who had lost their funds due to fraud, theft, or other illicit activities, even if the issue originated from elsewhere. 

Recalling his experience with our customer support team, our user acknowledged that “the whole issue had nothing to do with [Binance] either, just that the funds went to Binance addresses.” However, we felt compelled to step in. Preventing cryptocurrency fraud is a joint initiative that all players in the crypto space should participate in. It’s in the best interests of all cryptocurrency users for the space to be safer and more secure. “To a top global exchange like Binance, 200,000 yuan is just a tiny amount... But Binance didn’t leave us alone. They locked the funds immediately and helped us recover them. Through this, I was able to understand how a company puts its users first, and how a major player shoulders its responsibilities for the whole industry."

We had acted similarly months earlier, when cybercriminals targeted high-profile Twitter accounts in a high-visibility hack of the popular social media platform. Dozens of users unwittingly sent crypto to the hackers’ Bitcoin address. Some of the funds entered our exchange, and we responded by locking the funds, as well as blocking users from sending crypto to the hackers’ address. 

“Recovering funds from some absconders feels even more satisfying than owning them. I decided to write a thank-you letter to Binance and express my gratitude.” 

As for this case, we want to thank everyone involved who flagged the issue to our customer support team. And we owe a special thanks to the anonymous user who shared his story online. 

“Finally, I want to remind all crypto investors: be careful and find the right project to invest, and choose a safe and reliable exchange,” cautioned the user.  Learn how to avoid common cryptocurrency scams and secure your Binance account to prevent bad actors from accessing your funds. 

Follow us on Twitter, Instagram, Facebook, and YouTube, and join our official Binance Telegram group to talk more with our community.