Binance’s analysis claimed illicit trading volume on major crypto exchanges, including itself, is only 0.018% to 0.023%, but Chainalysis disputes this, stating the figures exclude key categories like ransomware and hacks, and ignore indirect fund flows through personal wallets.
-
Binance used Chainalysis and TRM Labs data to highlight low criminal exposure despite high trading volumes.
-
Chainalysis clarified the analysis was internal to Binance and omitted major illicit activity types for a more complete risk picture.
-
From January 2023 to June 2025, Binance reported reducing illicit fund exposure by 96% to 98%, processing over $90 billion daily amid enhanced compliance efforts.
Discover the Chainalysis-Binance dispute over illicit trading volume analysis. Uncover missing crime categories and compliance claims in crypto exchanges. Stay informed on blockchain security trends today.
What is the dispute between Chainalysis and Binance over illicit trading volume?
Binance illicit trading volume analysis centers on a recent exchange report using blockchain data from Chainalysis and TRM Labs, which suggested criminal activity across top platforms is minimal at 0.018% to 0.023%. Chainalysis has publicly challenged this portrayal, emphasizing that the methodology excluded significant illicit categories like ransomware payments and funds from hacks. The firm stressed that the figures only captured direct exposures, overlooking layered transactions through intermediate wallets, potentially underrepresenting true risks in the cryptocurrency ecosystem.
How did Binance’s methodology for illicit activity detection fall short according to Chainalysis?
Binance’s internal analysis, initially presented as leveraging Chainalysis insights, focused on direct connections between known illicit wallets and trading activities on its platform. According to Chainalysis’s public statement on X, this approach did not incorporate comprehensive datasets covering all forms of cryptocurrency crime. For instance, the report omitted tracking for ransomware proceeds, which Chainalysis identifies as a major threat in its annual Crypto Crime Reports, and stolen funds from exchange hacks that reached billions in 2024 alone.
Chainalysis highlighted that indirect exposures—where illicit funds are laundered through personal or mixing wallets before reaching an exchange—were not accounted for, creating a narrower view of risk. This limitation is critical, as blockchain forensics experts, including those from Chainalysis, note that sophisticated actors often use such techniques to obscure origins. Binance responded by updating its November 19 post to clarify the internal nature of the calculations and added details on wallet linkage methods, but Chainalysis maintained that the core exclusions persisted.
The dispute underscores broader challenges in measuring illicit trading volume in crypto. Industry data from sources like the United Nations Office on Drugs and Crime indicates that while overall crypto crime volumes have declined since peaking in 2022, accurate detection requires holistic data inclusion. Chainalysis, a leader in blockchain analytics with tools used by over 1,000 agencies worldwide, emphasized its role in providing fuller risk assessments without endorsing selective interpretations.
Frequently Asked Questions
What categories of illicit activity were excluded from Binance’s crypto trading volume analysis?
Chainalysis pointed out that Binance’s figures did not include ransomware payments or funds stolen in hacks, which are tracked in its comprehensive datasets. These categories represent significant portions of crypto crime, with ransomware alone accounting for over $1 billion in 2024 according to Chainalysis reports, ensuring a more accurate evaluation of exchange risks.
How has Binance improved its compliance against illicit crypto flows since 2023?
Binance has significantly enhanced its anti-money laundering measures by reducing illicit fund exposure by 96% to 98% from January 2023 to June 2025. The exchange employs 1,280 compliance specialists, collaborates with law enforcement on 240,000 requests annually, and integrates AI-driven tools alongside programs like Beacon Network to detect and freeze suspicious activities effectively.
Key Takeaways
- Selective Data Use: Binance’s analysis relied on partial Chainalysis datasets, excluding ransomware and hack-related funds, which Chainalysis argues distorts the full scope of illicit risks.
- Compliance Advancements: Despite the dispute, Binance demonstrates strong operational improvements, including a 96-98% drop in illicit exposures and extensive global training for investigators.
- Transparency Matters: Exchanges should adopt comprehensive methodologies to build trust with regulators and users, incorporating indirect flows for better crime prevention in the crypto space.
Conclusion
The ongoing tension between Chainalysis and Binance illicit trading volume analysis highlights the complexities of assessing cryptocurrency risks, where incomplete data can lead to misleading conclusions about illicit activities. As platforms like Binance continue to bolster compliance—evidenced by reduced exposures and robust internal teams—the industry moves toward greater accountability. Looking ahead, fuller integration of analytics tools will be essential for fostering a secure blockchain environment, encouraging exchanges to prioritize comprehensive reporting for sustained regulatory trust and user confidence.
