Binance Partner Advcash May Facilitate Transfers from Sanctioned Russian Banks
Belize-domiciled Advcash also provides services to Bybit, Kucoin, and other major crypto exchanges. What will investigators probing Binance think about this?
On May 5, 2023, Bloomberg reported that the cryptocurrency exchange Binance is under investigation by the Department of Justice for allegedly violating sanctions against Russian parties:
The inquiry by the Justice Department’s national security division is looking at whether Binance or company officials ran afoul of sanctions related to Russia’s invasion of Ukraine, according to five people familiar with the matter who asked not to be named discussing a confidential investigation.
There is already significant evidence in the public domain suggesting Binance may have committed sanctions violations. In January 2023, the U.S. Department of Justice indicted the leader of the Russian cryptocurrency exchange Bitzlato for unlicensed money transmitting and money laundering violations. In an accompanying order, the Financial Crimes Enforcement Network (FinCen) reported that Binance was one of the major counterparties to the Bitzlato exchange:
Approximately two-thirds of Bitzlato’s top receiving and sending counterparties are associated with darknet markets or scams. For example, Bitzlato’s top three receiving counterparties, by total amount of Bitcoin received between May 2018 and September 2022, were 1) Binance, a VASP; 2) the Russian-connected darknet market Hydra…
The recent CFTC complaint against Binance offers another example of Binance’s attitude towards doing business with questionable Russia-linked entities. According to the complaint, when a large Binance customer was found to have “over 5m USD worth of transactions indirectly sourced from questionable services,” Binance’s former Chief Compliance Officer Samuel Lim responded:
Can let him know to be careful with his flow of funds, especially from darknet like hydra
He can come back with a new account
But this current one has to go, it’s tainted
Hydra was an infamous darknet Russian crypto exchange and mixer that offered its services to drug dealers and other organized criminals. Hydra’s founder was arrested and indicted in April 2022 for conspiracy to commit money laundering.
We have uncovered yet connection between Binance and the potentially illicit flow of funds out of Russia. We have previously discussed Binance’s payment processor Advcash, a Belize-domiciled and apparently Russia- and Kazakhstan-based financial firm. We recently obtained screenshots of Advcash’s customer interface, which is unavailable to U.S. users. These images demonstrate Advcash currently offers to convert Russian rubles from sanctioned banks like Sberbank and Rosbank into U.S. dollars held in the customer’s digital Advcash wallet. They do so by linking their customers with “independent exchange providers” with exotic names like “CoinPayMaster,” “Obmennik-UZ,” and “Bankcomat:”
Advcash offers similar services by credit card:
Advcash also offers to help move cash rubles to the digital Advcash wallet in amounts above $5,000 USD:
According to Advcash’s site, you can even move rubles to USD from your Binance account:
Note that Advcash states that these services are provided by third parties. However, the end result is that funds from sanctioned entities end up in Advcash’s bank accounts. Customers can then convert rubles to USD, Euros and many other fiat currencies within the Advcash system.
From there, Advcash customers may transfer funds from their Advcash digital wallet to other entities including the crypto exchanges Binance, Bybit, OKCoin, Kucoin, and others. Alternatively, Advcash customers can directly buy crypto on the Advcash platform, a service provided through the company’s partnership with Binance.
While these findings do not definitively prove illegal activity, the services offered by Advcash certainly seem problematic in light of sanctions related to the current war in Ukraine. Based on the services advertised on their site, it seems possible that Advcash could be used to evade sanctions on Russian banks. For example, one could use a third party service (shared by Advcash) to move rubles from sanctioned Sberbank into an Advcash wallet. The customer could then purchase crypto on the Advcash site, using services provided through the Binance partnership, and then transfer that crypto to Binance or a different crypto exchange. By cashing back out to fiat currency, the customer could successfully avoid the Western blockade of the Russian financial system.
With Binance under the harsh light of formal criminal investigations, we wonder what investigators probing Binance will think about their partner Advcash’s interesting business model…
Dirty Bubble Media: Insightful analysis and commentary on finance, fraud, and the dirtiest bubbles of the 21st century.