Binance Partners With Chainalysis For Better Fraud Detection on its Platform

Binance and Chainalysis

Compliance and fraud detection are two major pain points for all cryptocurrency exchanges. Establishing procedures that can help in continuous monitoring of these two areas requires tremendous amount of effort. However, technology helps with everything, and if companies are continuously on the lookout for new solutions related to anything, they can eventually find something to ease their life. Binance has proved this once again. It has partnered with crypto compliance software provider Chainalysis to implement a new monitoring system for fraud detection.

The partnership was announced a few hours back, and as part of this partnership Chainalysis will provide Binance with access to its “Know Your Transaction” software. The software has been developed to monitor transactions in real-time, and whenever it spots any suspicious transactions it generates an alert. It can also help Binance in opening bank accounts as it’s compliant with KYC and AML guidelines of major economies.

Speaking about the partnership Mr. Wei Zhou, Chief Financial Officer (CFO) of Binance told Coindesk:

“The ultimate goal of our partnership with Chainalysis is to create an environment in blockchain where everyone feels safe. We believe the fight against money laundering to be collaborative and pro-active.

While company already has strict KYC and AML measures in place, and also has a dedicated team of compliance professionals, Mr. Zhou said that it’s important to be on the lookout for new technologies if criminals have to be stopped. He said:

“Criminals are always looking to loopholes in the system, so we are continuously on the lookout for new technologies and methods to combat money laundering and malicious actors.”

Mr. Jonathan Levin, the Chief Operating Officer of Chainalysis, also said that this new partnership will help the entire ecosystem. He said:

“Cryptocurrency market participants must develop greater trust in the data and technology underlying our ecosystem in order for the overall space to advance. By working with industry leaders like Binance, we’re able to mold the foundation for credible and robust markets in all jurisdictions.”

The Chainalysis software uses a combination of proprietary algorithms, pattern recognition technologies and several open-source resources to detect fraudulent and illicit transactions. It will be interesting to see which other exchanges adopt its technology after Binance.

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Blockchain Surveillance Firm Partners With Cryptocurrency Exchange Binance

Blockchain Surveillance Firm Partners With Cryptocurrency Exchange Binance


On Oct. 17, the world’s largest cryptocurrency exchange by volume, Binance, announced a partnership with blockchain surveillance company Chainalysis. According to the exchange, Chainalysis has implemented a compliance solution that meets regulatory guidelines worldwide.

Also read: Bizarro World: Federated Sidechain Technology Promoted Over Nakamoto Consensus

Binance Is Using Chainalysis for Compliance   

According to a press release published on Oct. 17, Binance and Chainalysis have joined forces to create a compliance solution for trading operations. The collaboration will further ensure that Binance exchanges comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) laws. The co-founder of Chainalysis, Jonathan Levin, explained during the announcement that all cryptocurrency businesses face the challenge of “earning the trust of regulators, financial institutions and users.”

“We expect many to follow Binance’s lead to build world-class AML compliance programs to satisfy regulators globally and build trust with major financial institutions,” Levin detailed. “Chainalysis’ compliance software, Chainalysis KYT (Know Your Transaction), is the only real-time transaction monitoring solution for cryptocurrencies.”

Blockchain Surveillance Firm Partners With Cryptocurrency Exchange Binance

To Some, Regulatory Compliance and Permissionless Innovation Mix Like Oil and Water

Levin says that the Chainalysis software uses methods like proprietary algorithms and pattern recognition that can raise alerts when suspicious transactions happen. Binance will be able to leverage the KYT software and other services Chainalysis offers. Wei Zhou, CFO at Binance, says the collaboration helps the exchange build a “foundational compliance program.”

“Our vision is to provide the infrastructure for a blockchain ecosystem and increase the freedom of money globally, while adhering to regulatory mandates in the countries we serve,” Zhou stated.

Blockchain Surveillance Firm Partners With Cryptocurrency Exchange Binance

Overall, both companies believe the compliance solution will enhance the cryptocurrency environment. Moreover, Chainalysis thinks exchanges working with them will make it easier for cryptocurrency firms to open bank accounts and establish relationships with legacy financial providers. However, on forums and social media, many digital asset proponents voiced their displeasure at the announcement. Most cryptocurrency users wholeheartedly believe in privacy, and are concerned by a growing trend for blockchain surveillance.

What do you think about Binance teaming up with the blockchain surveillance firm Chainalysis? Let us know what you think about this subject in the comments section below.

Images via Shutterstock, Binance and Chainalysis

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Chainalysis Finds That Bitcoin Whales Are Not the Sole Source of Market Volatility

Data from a detailed Chainalysis study found that Bitcoin whales may actually function as a stabilizing force in the market.

Who’s in Charge of the Market?

A newly published study from Chainalysis makes a strong case that Bitcoin (BTC) 00 whales are not the shadowy culprits behind the notorious volatility associated with Bitcoin and the wider cryptocurrency market. The blockchain research firm reached this conclusion by analyzing 32 of the largest bitcoin wallets, which contain a total of 1 million bitcoin worth nearly $6.3 billion.

To date, the general assumption among many traders has been that bitcoin whales impact price action by exerting their inordinate influence over the entire cryptocurrency market. Surprisingly, Chainalysis’ research goes against this common assumption by revealing that the ranks of bitcoin whales are comprised of “a diverse group,” and less than a third are actually active traders. Data also showed that these ‘trading whales’ displayed a tendency to accumulate on price declines rather than function as the sole force responsible for causing sell-offs.

Close analysis of the “trading” whales suggests that they do not significantly contribute to volatility as:

Net activity demonstrates that trading whales were not selling off Bitcoin in any mass amount, but rather were net receivers of Bitcoin from exchanges in late 2016 and 2017. This indicates that trading whales were, in aggregate, buying on declines and, consequently, were a stabilizing, rather than destabilizing factor in the market…

Recent data from a separate study also shows that bitcoin whales and institutional investors often prefer to buy and sell cryptocurrency using over-the-counter (OTC) transactions instead of dumping large amounts of cryptocurrency on a variety of exchanges.

Whale breaching and diving.

Apparently, there are only 4 Whale Species

By dividing these 32 wallets into four groups, Chainalysis was able to determine that nine of the wallets with more than 332,000 coins were controlled by traders who sprung up around 2017 and this group made regular transactions on exchanges. The second group of 15 wallets comprised mainly of miners and early adopters in charge of 332,000 coins was relatively action-free except for the occasional sales when bitcoin prices skyrocketed from 2016 to 2017.

Chainalysis concluded that the two remaining groups consisted of three wallets belonging to “criminals” in possession of more than 125,000 coins and forever “lost” wallets and with a coin value of more than $1.3 billion (212,000 BTC).  

Facts Help the FUD Dissipate

The Chainalysis report provides a fascinating insight into the detailed movements and holdings of bitcoin whales and in a market that is heavily driven by rumor and speculation, a bit of solid research that shines a correct light on market misconceptions is always a welcome treat.


On the topic of rumors, manipulation, and whales, surely the crypto-verse will wonder exactly which whale just moved
15,220 ($100,317,283) from between wallets.

Do you think Bitcoin whales drive the market — or is the Chainalysis report a better explanation for what moves the market? Share your thoughts in the comments below! 

Images and media courtesy of Shutterstock, Twitter/@WhaleAlert.