Is Binance Safe? (Read Before You Trade)

What is Binance? 

Binance was founded in 2017 and today is the world’s largest exchange by volume. Binance is popular due to its easy-to-use interface, wide range of cryptocurrencies (350+), and low fees (0.1% and lower). 

Let’s take a look at a few statistics about Binance: 

• 250 million registered users by the end of 2024 (a 47% increase from 2023)
• Cumulative trading volume exceeding $100 trillion
• A presence in over 100 countries

While Binance has seen significant user growth in recent years, it’s also faced controversy. The platform has been forced to withdraw from markets like Canada and Australia, and even saw its CEO Changpeng Zhao resign and face criminal charges in the US. 

Security features of Binance

Binance is considered a secure exchange. Let’s walk through some of the measures that Binance takes to keep your cryptocurrency safe: 

• Encryption: Binance uses end-to-end encryption for all transactions. 
• Cold Wallet Storage: Binance stores the majority of customer funds in offline, cold storage to protect against potential hacks. 
• Two-Factor Authentication (2FA): Binance offers two-factor authentication — giving you an extra layer of protection if a hacker gains access to your password. 
• Real-Time Monitoring: Binance uses AI to detect scams and fraud. Binance sent more than 15,000 alerts to users daily in 2024.
• Access Control: Users can whitelist wallet addresses and limit access to your account API based on IP address. 
• SAFU (Secure Asset Fund for Users): Binance maintains a $1 billion insurance fund to reimburse users in case of a hack. 
• Fraud Prevention: In 2024, Binance blacklisted 47,000 malicious addresses. It’s estimated that these actions prevented $129 million in losses. In addition, Binance recovered $9.1 million via its Anti-Scam Refund Initiative.

What legal and regulatory issues has Binance faced? 

In recent years, Binance has faced regulatory challenges across the globe. 

Global Scrutiny: In recent years, Binance has withdrawn from countries like Canada, Australia, and the Netherlands due to regulatory pressure, leaving users in these regions unable to trade or access funds.

U.S. Regulatory Issues: Binance.com was forced to stop operating in the US. In response, Binance launched Binance.US — a platform specifically designed to comply with American regulations. While the platform offers less cryptocurrencies and a different fee structure than Binance.com, it’s considered safe and secure. 

Money laundering controversy: Binance has faced issues in the US for violating money laundering-related laws. Binance has paid more than $4 billion in fines related to these violations. In addition, Binance CEO Changpeng Zhao was forced to resign and was sentenced to four months in prison in the United States. 

Binance has taken steps to address these challenges. In 2024, Binance expanded its compliance team to over 650 professionals and secured 21 regulatory licenses in various countries. 

Why should I use Binance? 

While Binance has faced issues in multiple countries, it does offer the following benefits:

• Low fees:  Binance offers some of the lowest fees in the industry. Fees are 0.1% and lower on Binance.com! 
• Wide cryptocurrency selection: Binance offers more than 350 cryptocurrencies for trading — significantly more than other exchanges! 
• Advanced features: Binance offers advanced trading options like margin and derivative trading — as well as features like Binance Pay for low-fee cross-border transactions. 
• User-interface: Binance is considered easy-to-use, and transactions are executed in a fast, seamless manner. 

With any exchange, it’s important to weigh the pros and cons. If you value the features above, Binance may be a great option for you. However, it’s important to keep in mind the regulatory issues that Binance has faced in the past. 

What are the risks of using Binance? 

Let’s walk through the risks of Binance:

Platform Breaches: Binance has faced multiple hacks in its history. However, the company’s insurance fund has been used to fully compensate users for lost assets. 

Phishing scams: Scammers often impersonate support representatives from Binance to hack into customer accounts. However, it’s important to note this type of scam is not just limited to Binance — it’s common across the cryptocurrency ecosystem. 

Regulatory risks: In the past, Binance has stopped operating in multiple countries due to regulatory issues. If Binance pulls out of your region, you’ll need to transfer your funds to avoid losing access to your crypto. 

How to stay safe on Binance 

Let’s walk through a few tips to stay safe on Binance and other exchanges. 

1. Enable 2FA: Turn on 2-factor authentication to give your account an extra layer of protection. 
2. Use Strong, Unique Passwords: Avoid reusing passwords and consider using a password manager.
3. Protect Against Phishing: Avoid clicking on suspicious links and be cautious of anyone who claims to be a support representative from Binance. 
4. Avoid Malware: Install antivirus software like MalwareBytes to protect against cybersecurity threats. 
5. Withdraw Crypto to Private Wallets: It’s recommended that you move your cryptocurrency to a custodial wallet for long-term storage. A cold wallet can provide extra protection by storing your private keys offline. 

How does Binance compare to competitors? 

Here’s how Binance stacks up against its competitors:

In conclusion

Binance offers industry-leading security features, including cold wallet storage and a $1 billion SAFU fund. While its features have attracted many users across the globe, it's important to be aware of regulatory updates.