Binance Shuts Down $1M Embezzlement Claims; Complied With South Korean Authorities

Binance crypto exchange has responded to claims that it embezzled close to $1 million worth of crypto from one of its users’ accounts. The exchange now says that it simply followed instructions from South Korea’s authorities who requested the funds to be frozen back in November 2018.

#Binance remains committed to combating fraud without compromising the truth.https://t.co/SjrxNf8xzq

— Binance (@binance) April 9, 2020

According to Binance, this action had been initiated based on a flagged 3,995 ETH transfer alleged to be the proceeds of a listing scam. However, the user denies getting any complaints from law enforcers in South Korea. In fact, they had earlier stated of suspecting Binance for fraud,

“I have every reason to believe that Binance misappropriated my money for itself. Communication with them continues from November 21, 2018. It has been 18 months already,”

These claims came to light through a Russian based crypto media, Forklog, which cited cyber sec firm, Hackcontrol, for the information. The premier report highlights that over $250,000 worth of the frozen funds is not correlated to the alleged listing scam. Also, the account owner said that the total frozen digital assets amounting to $858,999 as per the prevailing market price include; EOS, ZEC, IOTA, LTC, BTC and ETH amongst others.

Binance Action Based on Police Request

In its defense, Binance cleared the air noting that their action was informed by a police report which identified malicious actors. The said persons were attempting to leverage Binance’s brand to rip off unsuspecting projects according to the crypto exchange,

“An unidentified person (the “suspect”) sent emails impersonating himself as a ‘Binance representative,’ promising to help list the victim’s cryptocurrency on Binance and other exchanges, for a fee. As a security deposit from the victim, the suspect received a remittance in cryptocurrency (ETH) of approximately 10 billion worth of KRW.”

Binance further noted that it moved to act based on a request by South Korea’s law enforcement. The exchange says they performed thorough due diligence and eventually returned the alleged scam proceeds to the victim.

Probable Class Action Lawsuit Against Binance

Following this development, the frozen funds' owner has threatened to take the matter to court. They had also escalated the issue with Ukrainian authorities who contacted Binance on the same back in April 2019. Things might, however, get thicker for Binance given the account holder’s claims that South Korea’s authorities had denied Binance’s narrative. Furthermore, Hackcontrol has identified similar cases totaling to $3 million; the victims are now looking to file a class-action suit against the exchange.