In a striking twist of fate, Binance, the world’s largest crypto exchange, has found itself at the center of a massive hack just two years after its founder, Changpeng Zhao, was released from prison for failing to implement proper anti-money laundering measures. Zhao, who penned a book titled Freedom of Money: A Memoir of Protecting Users, Resilience, and the Founding of Binance during his incarceration, now faces the challenge of living up to the promises he made in his memoir.
Last Friday, hackers stole $US6.3 billion in tokens from Binance’s platform. The exchange has since managed to cover 95% of the stolen tokens through its Security Asset Fund for Users (SAFU) program and has resumed withdrawals. However, recovering the stolen funds remains a daunting task, as the hackers have already converted much of the haul into decentralized cryptocurrencies like Bitcoin and Ethereum, which are harder to trace and freeze.
The FBI has identified the hacking group as TraderTraitor, linked to North Korea. The stolen funds, initially in stablecoins like Tether and Circle, were quickly exchanged for Bitcoin and Ethereum to evade detection. About half of the stolen coins were frozen by law enforcement and industry players, but the remaining $US3.3 billion is still being moved across various platforms and wallets.
Zhao’s past failures in implementing robust anti-money laundering processes now put pressure on other cryptocurrency exchanges to block suspicious transactions. The irony is palpable, as Zhao’s book downplayed his legal troubles, describing his jail time as a process designed to deliver the lowest possible customer satisfaction. The US government, however, had argued that Binance had failed to stop hundreds of millions of dollars in unlawful transactions, including those involving sanctioned Iranian entities and drug traffickers.