Binance Sentry Report: Findings on the Prevalence of Online Investment Schemes

As one of the largest cryptocurrency exchanges in the world, we at Binance naturally feel it is our duty to contribute to the overall safety of the greater crypto space. Unfortunately, there exists a vast number of malicious actors that share a very different mindset.

In response to our first-hand experience with these threats, and in an effort to better understand their impact on the industry as a whole, Binance Sentry was formed in 2018 to complement our existing security infrastructure.

Binance Sentry is an internal risk intelligence unit structured within Binance’s security team. Drawing from its eclectic investigative experience, this team of professionals uses both blockchain and open-source analysis to better understand the crypto threat landscape and threats that we, as a community, face together. Binance Sentry is committed to securing Binance’s products and services as well as improving the safety, security, and livelihood of our customers and the entire ecosystem.

From facilitating the identification and recovery of stolen assets to alerting users to scams and fraudulent activity, the Binance Sentry team is always working to ensure that your funds remain SAFU.

Multi-jurisdictional investment schemes

Time and time again, Binance Sentry has observed reports of fraudulent investment schemes promising quick or exponential returns on cryptocurrency investments. Many of these schemes not only deal in cryptocurrency, but also advertise investment services in foreign exchange (forex), binary options, or contracts for difference (CFDs), and they are frequently the subject of regulatory warnings. Media reports have highlighted the risks posed by these networks, particularly those that target and harass victims who have only limited investing experience. The Organized Crime and Corruption Reporting Project (“OCCRP”) has published an investigative series examining one such network, operating out of a call center in Kyiv.

These schemes sometimes operate under the facade of different, seemingly unrelated brands, and it is not uncommon for dozens of projects to be branches of the same malicious operation. Where one brand might be crypto-specific, another may focus on forex or CFDs. Warnings from regulators, like the United Kingdom’s Financial Conduct Authority (FCA) or Italy’s Commissione Nazionale per le Società e la Borsa (CONSOB), illustrate how an entity or group of bad actors can do business under various names. 

Some go as far as using false consumer organizations to con their victims into shelling out more money once they have become suspicious of the original fraud. Fabricated regulatory authorities and other government-affiliated services, such as corporate registers, are sometimes used to lend legitimacy to the schemes’ various brands and to falsely reassure and/or intimidate unknowing investors.

Among the multiple networks that Binance Sentry has recently examined, we have also seen the use of related ancillary services, including marketing outfits and law firms, human resources teams, and project rating sites. The goal of this is to cultivate credibility and further support these networks’ activities, many ostensibly doubling as “legitimate” operations.

Moreover, given the transnational nature of many of these organizations, their victims are often situated all over the world, living in jurisdictions that are different from the pseudo-services to which they fall victim of. As one may expect, this not only results in an increased level of difficulty for law enforcement investigations but also complicates the process of establishing connections between victims.

Combating large-scale investment schemes

Binance Sentry continues to work hard to better understand this complex threat landscape, examining and analyzing these networks day-in and day-out to improve the safety of our users as well as that of the crypto ecosystem. To support this initiative, we have partnered with numerous analytics providers to help us identify threats and stay ahead of evolving tactics, techniques, and procedures. We are committed to monitoring these malicious activities and will continue to work closely with law enforcement agencies around the world, as well as other exchanges and industry partners, to effectively shut down this activity wherever it is identified.

We encourage our community to beware of promises of quick returns on investments and to always DYOR (do your own research) on services and projects before using them or investing in them. Binancians should also heed warnings issued from official regulatory bodies and relevant media coverage and stay vigilant of projects claiming to have an affiliation or an endorsement from Binance. 

For users seeking additional information regarding fraudulent investments and scams, Binance Academy has a summary of five common scams and how to avoid them.

Stay tuned for more updates from Binance Sentry as the security team at Binance works to protect you and your assets.

1 Trail of Broken Lives Leads to Kyiv Call Center. OCCRP, March 2, 2020.

2 Prestige Financial Markets owned by AllProTech OÜ. Financial Conduct Authority (United Kingdon), August 6, 2018.

3 Consob Informa no. 39/2017. Commissione Nazionale per le Società e la Borsa (Italy), October 30, 2017.

4 Latest Warnings. Commissione Nazionale per le Società e la Borsa (Italy).