Crypto Crime Down in 2023 as Binance Boosts Compliance Investment by 35%

The recently published 2024 Crypto Crime Report by blockchain data firm Chainalysis, reveals a notable decline in crypto-related crime throughout 2023. The report findings suggest a significant reduction in some of the key crypto crime metrics from 2022 to 2023: the share of illicit transactions in the overall crypto transaction volume went down from 0.42% to 0.34%. The total value of digital assets received by illicit addresses also showed a considerable decline between 2022 and 2023, going from $39.6 billion to $24.2 billion, – still considerably lower figures compared to the total amount of illicit funds that flowed through the global financial system last year was $3.1 trillion, according to NASDAQ’s Global Financial Crime Report.

Chainalysis’s estimate that only a fraction of percent of all crypto transactions were linked to criminal activity or sanctioned entities demonstrates that in 2023 the digital-asset space has been an extremely unwelcoming place to bad actors, and even more so than in 2022. This stands in stark contrast with false beliefs about crypto being a place of rampant lawlessness that some people still hold and promote.

The decline in illicit volumes and transaction share is the result of the crypto industry as a whole stepping up its collaborative security efforts, perfecting its defenses, and tightening its collaboration with law enforcement agencies. It is also likely that the average crypto user, too, has become more vigilant and aware of dangers like scams and fraud. In light of this, their estimate that only a fraction of percent of all crypto transactions were linked to criminal activity or sanctioned entities demonstrates that in 2023 the digital-asset space has been an extremely unwelcoming place to bad actors, and even more so than in 2022.

As the largest digital asset ecosystem and leader in the space, Binance has undoubtedly contributed its fair share to curbing crypto-related crime. Between 2022 and 2023, Binance’s investment in its compliance program increased 35% with overall funds allocated rising from $158 million to $213 million. Moreover, specialized teams responded to over 58,000 law enforcement requests, and conducted 120 law enforcement workshops and training sessions with crime fighters globally (up from 70 in 2022), including a virtual law enforcement training session to officers from the International Criminal Police Organization (INTERPOL).

Quantitative and Qualitative Improvements

In 2023, Binance significantly enhanced its transaction monitoring capabilities. The on-chain monitoring team processed 677,772 on-chain alerts with the implementation of a new automation tool, achieving a 150% increase in productivity in on-chain transaction monitoring, thereby analyzing and addressing more potential threats with the same allocated resources. Similarly, Binance analysts reviewed and closed 2,648,318 off-chain alerts in 2023 as a result of implementing new tools, both in-house and external, increasing productivity by an estimated 40% compared to the previous year.

Additionally, the suspicious activity report (SAR) team, responsible for investigating transactions that raise suspicion of illicit activity, completed 51,627 reports, marking a 157% increase in total cases and enhancing productivity by 180%. Meanwhile, the market surveillance team, tasked with monitoring trading activity on Binance and maintaining market integrity, implemented a new third-party monitoring solution, enabling the investigation of an average of 20,000 alerts per month.

“As the largest digital-asset ecosystem and leader in the space, we are proud to have contributed to curbing crypto-related crime, making the crypto and digital ecosystem a safer space, ” said Alexander Chehade, General Manager, Dubai at Binance FZE. “From constantly enhancing our security systems and transaction monitoring capabilities to providing critical intelligence and training to global law enforcement partners, we invested tremendous effort and resources in countering criminal activity last year – and continue doing so every day. Given the scale of our operations, the results of this work are definitely reflected in the aggregate numbers.

Looking Ahead

As a responsible leader in the digital asset space, Binance is committed to setting industry standards in security and compliance, thereby helping the entire ecosystem preserve its integrity and strengthen defenses against malicious actors. With 2024 poised to witness a fundamental shift in the crypto industry towards even stricter and more mature compliance practices, Binance remains steadfast in its dedication to providing a safer crypto environment for all users. This commitment is further demonstrated by the recent strengthening of our compliance leadership team, with the return of world-class expert Steve Christie, our former Senior Vice President of Compliance, as Deputy Chief Compliance Officer.

If the digital asset industry continues to maintain this positive momentum by continually enhancing its security and compliance capabilities while fostering greater cooperation within the space and with law enforcement, malicious actors will find it increasingly difficult to exploit the Web3 ecosystem. This underscores the clear message that crypto is an unfavorable environment for criminals.

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