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Top cryptocurrency exchange blackmailed for $3.5m over customer data

Changpeng Zhao, CEO of Binance, speaks at the Delta Summit, Malta's official Blockchain and Digital Innovation event promoting cryptocurrency, in St Julian's, Malta October 4, 2018. REUTERS/Darrin Zammit Lupi
Changpeng Zhao, CEO of Binance. Photo: Darrin Zammit Lupi/Reuters

Passports and identity documents from Britain, France, the United States, and other nations around the world are being posted online as part of an apparent attempt to blackmail the world’s biggest cryptocurrency exchange.

Binance said on Wednesday that it is being blackmailed for 300 bitcoin (BTC-USD) over alleged hacked customer data and was working to identify who was behind the demand.

The company said in a statement on Wednesday that “an unidentified individual has threatened and harassed us, demanding 300 BTC in exchange for withholding 10,000 photos that bear similarity to Binance KYC data.”


KYC data refers to “know you customer” data. Financial regulation requires companies handling money to know who they are dealing with. A spokesperson for Binance said said it requires new customers to provide a photo of their passport or official identification document and a photo of themselves holding the same document.

Binance said it has refused to pay the 300 BTC — equivalent to around $3.5m (£2.9m) at today’s prices — and, as a result, the individual behind the demand began distributing the identity data.

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A group has been set up on anonymous messaging app Telegram to share these images.

The group, seen by Yahoo Finance UK, has already shared over 400 images of passports, documents, and people holding them. The leak includes at least one British driving license and passport, as well as documents from France, Turkey, the Unites States, Japan, Russia, and South Korea.

The group, which Yahoo Finance UK has decided not to name, has attracted over 10,000 members. The admin said at 8.34am on Wednesday: “Uploading will be continued later.”

Binance said: “Our security team is hard at work pursuing all possible leads in an attempt to identify the source of these images.

“The relevant law enforcement agencies have been contacted and we will be working closely with them to pursue this person.”

The company said the images appeared to be from February 2018 when Binance was using a third-party provider to help it deal with customer verification. Binance said the leaked images contain “inconsistencies” and did not appear to be from its own systems.

Binance is offering a reward of 25 bitcoins — worth over $288,000 — for information related to the identity of the blackmailer.

“Please remember that protecting our users’ privacy and keeping our systems secure, including the funds stored within, is our utmost priority,” Binance’s Security Team said in a statement.

“We have numerous measures in place to ensure the safe-keeping of our users’ information, and we will continue to maintain the highest degree of transparency while serving our community.”

Binance, which was founded in Shanghai but has since moved to Malta, is the world’s biggest cryptocurrency exchanges by volume and handles over $1bn-worth of trade daily.

“We will keep all of you updated with any developments throughout our investigation and we are grateful for your continued trust and support,” Binance’s Security team said.


Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at@OscarWGrut.

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