Cryptocurrency exchange app Binance, has lost almost 90% of its customers after implementing KYC to prevent money laundering and terrorism financing.
The news comes after the exchange already took a series of measures that are compliant with most international regulations regarding financing and cryptocurrencies. In July 2021, Binance representatives decided to reduce the maximum amount of Bitcoin that customers who don’t undergo the KYC policy can withdraw, from 2 BTC to 0.06 BTC. However, the move cost the crypto exchange billions of USD in revenue, according to one of the company’s leads.
As crypto trading skyrocketed in the past couple of years, fuelled by the increase of customers’ interest in alternative payment methods and digital assets, many online traders decided to take a ride on the wave and gain customers’ trust with signup bonuses, low fees, and appealing exchange rates. Launched in 2017 and headquartered in the Cayman Islands, a popular fiscal paradise, Binance has become the cryptocurrency exchange with the largest exchange in the world, in terms of daily trading volume of crypto.
The company is considered a safe exchange that enables user account protection via Two-factor authentication (2FA), but this didn’t stop a major cyberattack in 2019, which resulted in over 7,000 BTC stolen from its hot wallet.
As crypto exchangers heavily rely on privacy, most exchange platforms looked the other way when onboarding new customers, rarely requiring personal information to comply with international Anti Money Laundering (AML) regulations. Binance is no different but, in an attempt to gain credibility, it shifted towards a safer onboarding process that aims to provide customer protection while abiding to AML and deterring any cases of fraud attempt, terrorism financing, and illegal activities.
According to research conducted by the company, the amount of illegal funds being brought in is weighed against the overall volume of the exchange. However, the company admits that some of the funds in its clients’ wallets may come from illicit activities, which is the main concern of worldwide authorities, and the number one reason why these exchange platforms heavily rely on protecting the customer’s identity.
Notably, Binance discrowned Coinbase and became the exchange with the most Bitcoin held globally, benefiting from enhanced public relations efforts and becoming regulated in various markets around the globe, including Dubai, Bahrain, France, Spain, and Italy.
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