Cryptocurrency analysis firm Chainalysis has disputed Binance’s assessment of illicit cryptocurrency flows using its own data, stating that the exchange’s analysis leaves out important categories and is therefore “incomplete.”
The controversy began when Binance claimed in a blog post published on November 17 that illicit trading volume on major exchanges was only between 0.018%–0.023%, citing data from Chainalysis and TRM Labs.
In its post, Binance argued that when the trading volumes of seven major crypto exchanges were examined, direct flows from illicit wallets were at extremely low levels, and that Binance, despite having much higher volumes, had the lowest exposure in the industry.
However, according to Chainalysis, the picture isn’t that simple. The company stated in a statement that Binance’s analysis only calculated direct illicit flows, excluding critical categories such as ransomware, hacked funds, and indirect transfers through intermediate wallets. The statement included the following:
“For example, if an illicit wallet first sends funds to a personal wallet and then to Binance, this will not show up in the analysis.”
Chainalysis noted that these “wallet chain” methods are widely used by criminals, but can often be traced with the right analytics tools. According to the company’s data, $2.2 billion in crypto assets stolen through hacks last year alone reached $1.7 billion.
Binance updated its blog post on November 19 following criticism, stating that the analysis was created by the company’s own team using Chainalysis and TRM Labs datasets, and that only direct exposure was taken into account in the calculation.
Chainalysis’s warning comes as Binance has recently been trying to signal stricter regulatory compliance. In 2023, the company paid $4.3 billion in fines for violating anti-money laundering rules, conducting unauthorized money transfers, and evading sanctions. Then-CEO Changpeng Zhao was sentenced to four months in prison but received a presidential pardon in October.
TRM Labs, another analytics firm cited by Binance, also issued a critical statement on the matter. The company’s global policy director, Ari Redbord, stated that the 0.018% rate cited by Binance was a “snapshot” of Binance’s exposure in June 2025, limited in scope, and only addressed direct exposure. Redbord noted that this figure was not taken from TRM’s publicly available reports, but rather from a dataset provided exclusively to Binance:
This number did not come from a publicly available TRM report. It was taken from a dataset provided exclusively to Binance. Binance has full discretion in interpreting and framing it.
*This is not investment advice.
