Chainalysis and TRM Criticize Binance’s Low ’Illicit Flow’ Claim
Cryptocurrency analytics firm Chainalysis has disputed a Binance blog post that cited Chainalysis and TRM Labs data to claim illicit trading volume on major exchanges was only 0.018%–0.023%. Chainalysis says Binance’s analysis measured only direct flows from illicit wallets and omitted important categories—ransomware proceeds, hacked funds, and indirect transfers via intermediary or personal wallets—methods commonly used by criminals. Chainalysis noted that such “wallet chain” movements can often be traced with proper analytics and pointed out that $2.2 billion in crypto stolen by hacks last year included $1.7 billion that reached exchanges. TRM Labs also criticized Binance’s use of its data, saying the 0.018% figure was a limited “snapshot” of direct exposure in June 2025 and derived from a dataset provided exclusively to Binance, not from TRM’s public reports. Binance updated its post to clarify it used Chainalysis and TRM datasets and calculated only direct exposure. The dispute arrives as Binance publicly seeks to demonstrate improved regulatory compliance following a 2023 settlement and fines totaling $4.3 billion over AML and sanctions violations. Key keywords: Binance, Chainalysis, TRM Labs, illicit flows, exchanges, hacked funds, ransomware, AML. This development highlights analytic methodology differences and may prompt closer regulatory and on-chain scrutiny of exchange inflows.
Neutral
The dispute centers on analytic methodology rather than new criminal events or fresh evidence of systemic exchange wrongdoing. Chainalysis and TRM argue Binance’s published figure (0.018%–0.023%) understates total illicit exposure because it counts only direct inflows and ignores hacked funds, ransomware, and chained transfers. For traders this is neutral overall: market-moving fundamentals (such as large hacks, regulatory enforcement actions, or major liquidity shocks) are not newly reported here. However, the disagreement may increase regulatory scrutiny and media attention on exchanges’ on-chain compliance, which could raise perceived regulatory risk for major exchanges over time. Short-term impact: likely muted — traders may see minor volatility around Binance-specific headlines or reputational concerns, especially for Binance-traded tokens, but no immediate liquidity shock is signaled. Long-term impact: potentially more significant if regulators demand broader disclosure or if analytics firms’ more comprehensive metrics lead to enforcement actions or tighter banking/fiat on-ramps for exchanges. Historical parallels: past analytics-driven revelations (e.g., tracing hacks and sanction-linked flows) sometimes preceded enforcement or delistings and caused temporary asset repricing. Traders should monitor follow-up reports, regulatory statements, and any exchange operational changes; adjust risk models for increased compliance-driven volatility around centralized exchanges.