- Reportedly Binance’s compliance head Tigran Gambaryan in an interview said, “We have lost 90% of customers after implementing KYC, losing billions in revenue”.
- In 2021, the same year Binance implemented KYC, the exchange earned 69% of the estimated revenue, amounting to $14.6 billion in trading fees.
- Binance’s CEO CZ has denied the claim calling it a ‘mis-quote’
Leading crypto exchange Binance is always known for its wait-and-see policy with respect to implementing regulations. Last year, Binance adopted a compliance-friendly approach to its business by making it mandatory for users to complete the KYC verification process.
“To gain full access and increase higher deposits and withdrawal limits, customers will need to complete the KYC verification process,” Binance’s blog post from April 2021 reads. In July 2021, Binance decided to lower the controversial 2-BTC withdrawal limit for non-KYC accounts to 0.06 BTC. Following that in Mid-August, Binance made KYC an obligation for all of its existing and new users to access its products and services, such as cryptocurrency deposits, trades, and withdrawals.
Later, in November, in an interview, Binance CEO Changpeng Zhao revealed that they lost about 3% of the users after making KYC obligatory. Nine months down the lane, in an interview with Coindesk, Binance’s compliance head Tigran Gambaryan reportedly said, “We have lost 90% of customers after implementing KYC, losing billions in revenue”.
His alleged statement comes amid a Reuters investigative report accusing Binance of illicit financing and for ignoring anti-money laundering laws. Reuters reported that, in 2021, Binance shared information with Rosfin monitoring funds raised by jailed Russian opposition leader Alexei Navalny’s network. According to the report, nearly $780 million of bitcoin is linked to the Russia-focused illegal drugs market, the Hydra Market has flowed through Binance since 2017.
The report further accuses the exchange of letting North Korean hacking group Lazarus open anonymous accounts using stolen funds. The report, replete with accusations against Binance for playing cat and mouse with regulatory bodies, tarnished the exchange’s reputation. Tigran Gambrayan was reacting to the report when he commented on Binance’s loss after implementing KYC.
The reported statement that the exchange lost 90% of customers is false. Binance stats show that the platform saw a volume of over USD 7.7 trillion in the year 2021. Reports indicate that its active users were 21.5 million in 2020 and 28.6 million in 2021. As per recent media reports, Binance’s current user base is lingering around 28.5 million.
A look at Binance’s trading volumes makes one easily understand that KYC implementation hasn’t affected its business as much as people did.
Apart from this, the revenue of cryptocurrency exchanges, including Binance, jumped over 700% from the earnings in 2020, which stood at $3.4 billion. In 2021, Binance Holdings Ltd. earned 69% of the estimated revenue, amounting to $14.6 billion in trading fees.
Binance’s CEO CZ has further denied claims that the exchange lost 90% of users after implementing KYC.
The KYC Mandate has helped reduce illicit activity on the platform, but as evident from data and reports, it hasn’t affected Binance’s profits much. Even when exchanges continuously surrender market volatility caused by LUNA/3AC exposure, Binance continues to hire employees in bulk, showing no signs of failure.