Binance is Flagging Withdrawals to Wasabi Wallet

~3 min read | Published on 2019-12-27, tagged BinanceChainalysis using 565 words.

Binance temporarily suspended the account of a customer for withdrawing Bitcoin to Wasabi Wallet. The user had to provide their reason for using Wasabi and promise not to use any “gambling, P2P, [or] darknet/mixer sites.”
The user, @bittlecat on Twitter, tweeted screenshots of the messages sent from the exchange as well as those sent in response to Binance’s inquiries. Binance CEO Changpeng Zhao provided validity to the user’s claim by replying to the tweet and effectively ruling out the possibility that @bittlecat had faked the interaction.
Here is what @bittlecat wrote:

The user had contacted Binance support after the exchange had suspended a withdrawal due to “risk management.” In response to the user’s message, Binance explained the reason for the suspension:
We performed a periodic review on your account and have a few questions with regards to your account activities that may help us enhance the security and maintenance of your account.

We hope to receive your reply within 72 hours to expedite this process.

1. We noticed [Redacted] cryptocurrency withdrawals to which upon our review is a mixing/private wallet provider with a total amount of [redacted] BTC in total, the addresses are as follows,

[Redacted Transaction Information] BTC)
[Redacted Transaction Information] BTC)

1. Kindly explain what is the purpose of withdrawing the above funds to Wasabiwallet?

2. Kindly advise us of the following and provide any supporting documents.

a) Your current occupation
b) Your annual income range

  • 0 - 1,000 SGD
  • 1,001 - 3,000 SGD
  • 3,001 - 8,000 SGD
  • 8,001 - 20,000 SGD
  • Above 20,000 SGD

  • The user responded with very minimal information but enough to satisfy the exchange for the time being. “I use wasabi wallet precisely because I dislike the thought of my transactions being watched,” @bittlecat wrote.
    Binance received “relatively public information” from the user about the requested employment information and annual income. @bittlecat to Binance:
    I’ve already sent over my verification documents, which is about as personal as it can get already. Given the number of data leaks and hacks in the cryptocurrency space, I am not comfortable sharing more documents. The recent Binance hack in May followed by a customer data leak in August inspires even lesser confidence.

    That said, I am willing to share what is relatively public information: I work as a PR executive, and my annual income is above 20k SGD. You have my assurance that I mix my coins purely for privacy reasons. I hope this addresses your concerns, looking forward to hearing from you soon. Have a good day ahead.

    Binance CEO Changpeng Zhao responded:
    One day later, @bittlecat posted a second tweet containing additional screenshots of the conversation with Binance support. Binance suspended the account until the user promised not to make any direct or indirect transactions to “gambling, P2P, and especially darknet/mixer sites.”
    Binance to @bittlecat:
    [A]t this juncture, Binance Singapore does not tolerate any transactions directly and indirectly with gambling, P2P, and especially darknet/mixer sites. As such, your account will be suspended until we obtain an acknowledgment within 72 hours that you will not transact with any of the above-mentioned types of sites going forward.

    Should there be continued activities to these sites again, you may find your account suspended as part of our internal risk management process and we may request further supporting documents.

    As the user pointed out, the exchange tracking transactions is not unexpected thanks to KYC (and likely other AML procedures). Binance suspended the transaction after user had initiated a withdrawal and then highlighted the user’s previous “withdrawals to”