Chainalysis Challenges Binance’s Crypto Crime Analysis, Highlights Missing Data on Illicit Activities

Chainalysis Responds to Binance’s Crypto Crime Analysis: Key Data Omitted

In a recent development that has stirred the crypto community, blockchain security firm Chainalysis has clarified concerns regarding an analysis conducted by Binance, the world’s largest cryptocurrency exchange. The clarification comes after Binance claimed that only a minuscule percentage of trading volume across major exchanges was linked to illicit activities, a statement that Chainalysis argues lacks crucial context.

In a blog post dated November 17, Binance asserted that data from both Chainalysis and TRM Labs indicated that a mere 0.018% to 0.023% of trading volume on the top seven crypto exchanges was directly associated with illicit wallets. The exchange emphasized its commitment to minimizing exposure to illegal funds, despite handling significantly higher trading volumes than its competitors.

However, Chainalysis has pushed back against this narrative. In a follow-up post on November 28, the firm pointed out that Binance’s analysis did not encompass all categories of illicit activity it tracks. Notably, it excluded funds linked to ransomware and hacks, focusing solely on direct exposure. “If an illicit entity sends funds to a personal wallet, and then that wallet sends funds to Binance, it is not included in this analysis,” Chainalysis stated, highlighting the common practice of “wallet hopping” used by crypto criminals to obscure their tracks.

The implications of this oversight are significant. Chainalysis reported that hacks accounted for nearly $2.2 billion in stolen crypto last year, underscoring the importance of a comprehensive analysis when assessing the risks associated with cryptocurrency exchanges.

In response to the scrutiny, Binance updated its blog on November 19, clarifying that it conducted the analysis using datasets from Chainalysis and TRM Labs and detailing how it calculated direct illicit exposure.

This clarification arrives at a critical time for Binance, which is striving to bolster its reputation amid ongoing regulatory scrutiny. Earlier this year, the exchange admitted to violations related to anti-money laundering and sanctions, resulting in a staggering $4.3 billion penalty. The fallout included the resignation of CEO Changpeng Zhao, who was sentenced to four months in prison for failing to maintain an effective anti-money laundering program, although he received a presidential pardon in October.

Additionally, Binance faces allegations from victims of the October 7 attacks by Hamas, who claim the exchange aided terrorist activities. Binance has refrained from commenting on ongoing litigation, asserting its compliance with international sanctions laws.

Ari Redbord, global head of policy at TRM Labs, noted that the 0.018% figure cited by Binance was derived from a specific analysis of the exchange’s activity in June 2025 and only covered direct exposure for a limited set of categories. “We would defer to Binance on any interpretation, comparisons, or framing around that statistic,” Redbord stated.

As the crypto landscape continues to evolve, the dialogue between security firms and exchanges like Binance will be crucial in shaping the future of regulatory compliance and the fight against crypto crime.