Key takeaways
For the blockchain ecosystem to thrive, its integrity must be protected: this is how industry players encourage its growth, by maintaining user trust.
With this in mind, Binance maintains a user-first culture that defines all of our achievements, which we bring to life by helping users find their misplaced and lost digital funds wherever possible, as well as freezing and recovering funds ill-gotten that arrive on our platform.
Countering bad actors requires coordination of multiple parties within the ecosystem; In this regard, Binance's security team has frozen and/or recovered approximately $55 million in user funds throughout 2023.
The rise of digital assets has completely changed the way people manage their finances. Such a paradigm shift, especially when it involves new technologies, makes trust a key resource to ensure progress and adoption. At such critical times, new ecosystems and burgeoning sectors are vulnerable to bad actors seeking to exploit their emerging status. This is why in the early history of digital finance, we witnessed several notorious crypto fraud cases which, in turn, gave rise to misconceptions that cryptocurrencies are primarily used for criminal purposes. .
To foster the growth of this fledgling ecosystem, industry leaders like Binance must leverage their reach and resources to support other players in the nascent market, protecting users and preserving the integrity of the industry. . Since its inception, Binance has been committed to this responsibility, and it is a pillar of our vision that always puts users first. It remains our duty to put the community first and protect the integrity of the ecosystem.
Maintain a dynamic ecosystem
The integrity of the ecosystem ensures the protection of users in their interactions with the world of digital assets, and preserving it amounts to protecting the individuals who operate within it, and thus supporting its growth. With the right tools and techniques, a leader like Binance can play a key role in this process by protecting users from malicious attacks launched on the ecosystem and mitigating their consequences if they occur.
Although Binance has its own range of platforms, products and services, it represents only a small part of the global digital asset community. From the protocols that form the infrastructure layer to the users, developers and intermediaries that operate within it, several entities coexist to form the global blockchain ecosystem.
In our early days, we were criticized for trying to preserve the integrity of the ecosystem by protecting users and recovering their funds. Most of our critics favored a less interventionist approach, aligned with the decentralized nature of blockchain and its foundations in code. In a decentralized, permissionless network, code governs the flow of funds and information in place of a central entity. When a centralized exchange platform such as Binance takes responsibility for recovering lost funds or addressing the negative effects of security breaches, its actions are sometimes considered to go against the law of the code under underlying; Yet if the code fails, industry leaders must step in to protect it.
The criticism hasn't stopped us from continuing to focus on the user to become one of the first exchanges to implement protections against scams, hacks and rug pulls, as well as conduct proactive recovery efforts following incidents of these types. We were also among the first to actively collaborate with law enforcement agencies around the world to combat cryptocurrency crime. The trust and support of the community, on and off our platform, has always contributed to our success: in return, we continue to nurture the ecosystem and foster this harmonious cycle of growth.
Help people
The crypto world can sometimes be intimidating, especially for newcomers: some transactions don't go as planned, or cryptos disappear. Herein lies the potential of preserving ecosystem integrity: protecting and recovering the assets of all users. As many in the industry are well aware, the immutable nature of blockchain can make it difficult to recover funds, and tokens sent to the wrong address are typically lost once the transaction is validated.
However, the Binance Customer Service (CS) team offers a wide range of crypto recovery services to respond to various potential incidents: failure of token supply due to a network problem, an upgrade of the blockchain or maintenance operations on the wallet, deposit error on the wallets, token not listed, network not supported, etc. The CS also manages recovery problems linked to tokens delisted, deleted accounts, regulatory constraints, crypto deposit errors, and even lost NFTs.
No one is safe from an error: our CS agents are here to help you rectify them and make your operations safer and more user-friendly. In 2022 and 2023, the team successfully processed 381,616 requests, and managed to recover and return some $4.35 billion in cryptos deposited, but not credited for various reasons, to their rightful owners. These efforts help create a safe trading environment even for cryptocurrency novices, ensuring the integrity and robustness of the entire ecosystem.
Users represent the basis of the ecosystem, and their trust is the most important resource that drives our innovative field; Fortunately, the Binance CS team is here to create a friendly and secure environment for them.
Collective defense
Contrary to popular belief, only a tiny portion of cryptocurrencies are used in criminal transactions. According to the Chainalysis 2024 Crime Report, illegal crypto transactions represented only 0.34% of total blockchain transaction volume in 2023, compared to 0.42% in 2023. 2022. Yet when crimes involving crypto occur, the entire blockchain ecosystem mobilizes to fight them.
The Binance security team collaborates with various partners, including other exchanges, services, blockchain analytics companies, user communities, and more. It is often a question of acting as quickly as possible to freeze as many stolen funds as possible, especially when those responsible are established criminal organizations. These collective defense initiatives play a crucial role in protecting the ecosystem, and by contributing to these efforts, Binance's security team helped freeze and/or recover over $55 million in user funds throughout 2023.
Counteract fraud
rug pulls are a type of scam that invite investors to participate in seemingly lucrative projects, which the perpetrators then suddenly abandon after selling or withdrawing all their liquidity. Rug pulls are often associated with decentralized finance (DeFi) projects and decentralized exchange platforms (DEX). While the decentralized and public nature of these sectors helps community innovation flourish, it can also make policing and protection more difficult.
On October 13, 2020, a DeFi project named WineSwap completed its rug pull less than an hour after its launch, and its founders stole approximately $345,000 worth of funds from users. Binance's security team tracked the flow of funds across various blockchains to different exchanges, where the funds ended up being frozen. The next day, the team identified the suspect: a Binance user who quickly agreed to cooperate in returning the victims' funds. With the help of multiple parties across the entire ecosystem, we were ultimately able to return 99.9% of the stolen funds to their rightful owners.
Another large-scale rug pull took place on March 4, 2021, when the DeFi project Meerkat Finance disappeared the day after its launch. Fraudsters emptied investor accounts and made off with approximately $31.5 million in tokens. The BNB Chain community reached out to Binance, who tracked the stolen assets across multiple addresses. The community reported the incident, and Binance's security team monitored the scammer's activities to successfully identify a suspect. Over 95% of the stolen funds were eventually recovered, marking the largest successful fund recovery by Binance at the time.
Most recently, in May 2023, a project called XIRTAM was revealed to be a rug pull that stole approximately $3.3 million worth of ETH from investors before depositing the funds into a Binance account. Our security team quickly froze the funds to prevent scammers from accessing them. Subsequently, the team analyzed project activities to identify victims, calculate losses and reimburse more than 1,750 addresses. As of September 2023, we managed to return approximately $2.3 million to victims, and the process continues today.
Fight against piracy
Hackers take advantage of vulnerabilities in blockchains or associated platforms, such as wallets or exchanges, to illegally access funds and data. In these situations, Binance and other industry partners must act quickly to ensure these crimes do not go unpunished and launch a coordinated defense across the ecosystem.
In June 2022, Harmony's Horizon gateway was hacked and approximately $100 million in cryptocurrencies were stolen, an exploit attributed to the North Korean cybercrime group Lazarus. Subsequently, Binance’s security team helped trace and freeze over $8.5 million in stolen funds.
Lazarus did it again a year later, in June 2023, when it attacked the non-custodial platform Atomic Wallet. An estimated 5,500 user wallets were compromised in this massive exploit, which resulted in the theft of more than $100 million in funds. Binance's security team helped trace and freeze this money as soon as it arrived in Binance accounts and other exchanges we alerted. Overall, we were able to lock approximately $1.3 million in user funds.
Ultimately, these defensive efforts demonstrate the power of collective action, where a multitude of moving parts come together to protect a whole. This harmonious complexity characterizes the global blockchain ecosystem, and it remains our duty to serve it.
The future of integrity
Binance has always been driven by its dedication to users. Since our first day, users have been our top priority, and it is this commitment that has brought us to where we are today. Each of these cases illustrates how we preserve the integrity of the ecosystem, both independently and collectively with other industry players. This would be impossible without our common mission with our partners to serve the ecosystem.
As the next phase of global adoption arrives, ecosystem integrity will be even more crucial, and Binance's user-first culture will continue to guide us on our journey to surpass industry standards to support the ecosystem . When integrity is preserved, growth and development can flourish.
