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Chainalysis challenges Binance crypto crime risk analysis methods
Blockchain analytics firm Chainalysis is challenging the methodology behind Binance’s criminal risk analysis, stating that its team was not involved in preparing the report.
A dispute has arisen between Chainalysis and crypto exchange Binance over the accuracy of calculations related to illicit asset flows and the use of the American firm’s brand in Binance’s crime risk assessment.
The disagreement comes amid ongoing legal pressure on Binance following a $4.3 billion fine in the United States and new lawsuits related to terrorism financing.
Binance claimed that data from Chainalysis and TRM Labs showed that only 0.018% to 0.023% of trading volume on major crypto exchanges was linked to illicit wallets. However, Chainalysis stated that the analysis was not conducted by its team and did not include key crime categories tracked in its datasets.
Binance later admitted that the analysis was in fact carried out internally using raw data from Chainalysis and TRM Labs.
Methodology defines the outcome
To clarify the situation surrounding the use of its data, Chainalysis published a statement on its X (formerly Twitter) page, explaining that Binance’s methodology ignores transactions that pass through an intermediary personal wallet before illicit funds reach the exchange.
“In other words, if a criminal organization sends funds to a personal wallet, and that wallet later transfers funds to Binance, this is not counted in the analysis,” Chainalysis stated.
The analytics firm did not dispute that its datasets were used. The issue concerned which data segments were selected and which crime categories were excluded. In reality, crypto exchanges process far more illicit funds than Binance’s analysis suggests. This clarification comes as Binance seeks to demonstrate to regulators and the broader crypto industry that it takes crime-related risks seriously.
As we wrote, Binance expands VIP offerings with Prestige service for major investors
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