As reported in Forklog, a Russian-based crypto news site, Binance cryptocurrency exchange blocked an account with nearly $1 million worth of funds in November. The account owner said the Changpeng Zhao (CZ)-led exchange stole his cryptofunds worth $858,999 at the time.
On the other side, Binance turned its attention to 2,844,881 ETH transferred to the trading account with the request from the South Korean Police. Binance needed additional procedures for KYC / AML verification and a clarification about the origin of the funds. According to the Owner, He explained the source of the funds to the exchange in full. Although he did not give proof to support his claims. Consequently, Binance told him of a suspension of his account, at the request of the South Korean police.
The account owner also said, as stated by the Forklog, that he tried to find out whether there was actually a South Korean or international court ruling, and what were the legal grounds for the suspension of his account. His attorneys saw no reason to withhold or write off funds. The South Korean police have reportedly denied making any allegations about the account owner.
Binance Exchange addressed its side of the story on 9 April.
In an extensive declaration, Binance Exchange acknowledged that the user’s account had been blocked, taking instructions from the law enforcement agency in South Korea stating that the account should be blocked.
Binance claims a Korean Crypto Project (the “Victim”) lost 3,995 ETH after falling victim to a listing fee scam on November 8, 2018. Afterward, the project team reported the incident to local authorities. The investigation found that a user on Binance was then reported as obtaining a majority of the stolen funds with the initials B.K( the “suspect”).
The suspect obtained access to the victim’s authorized email and found out that the victim was trying on multiple exchanges to list his cryptocurrency. The suspect claimed to be a representative of Binance and obtained a deposit worth 10 billion KRW ($3,995 ETH) after saying that he will list the cryptocurrency of the project on the exchange.
The South Korean police found that “a majority of the stolen funds” had been received by a Binance user BK. And the Korean police asked Binance to move the scammed crypto funds from B.K.’s account to the victim, which the exchange did.
The exchange also informed B.K. about the request by the Korean law enforcement authority and advised to contact its local law enforcement authority.
“According to the statement released by Binance they said “On January 18, 2019, a Korean law enforcement agency reached out to Binance requesting for a transfer of the scammed funds from B.K.’s account back to the victim. After we performed all necessary due diligence steps internally, Binance complied with the request from Korean law enforcement and completed the return of funds”
In April 2019, Ukrainian law enforcement department on behalf of the user reached out to Binance. The organization clarified the incident and was advised there was no need for any further assistance, suggesting the enforcement department was pleased with the clarification.
The statement from the exchange came with screenshots of communication between the exchange and Korean law enforcement.
Binance emphasized that it worked closely with law enforcement agencies around the world and was willing to provide additional documents “to fight fraud and bring justice to these cases.”And also warned “Binance will not hesitate to take legal action against anyone who deliberately tarnishes its reputation through misrepresentation or misinformation”