Binance to Use “Soulbound Tokens” for AML/KYC

Binance to Use “Soulbound Tokens” for AML/KYC
Image: Jayden Yoon ZK on Unsplash
2 August 2022

With great Binance comes great responsibility. As the world’s largest crypto exchange, Binance is taking measures to address illicit activity on its platform.

Binance Account Bound (BAB) is the firm’s first soulbound –or non-transferable and non-financialized – token that’s built on its BNB chain.

Users will be able to access BAB via the Binance mobile app as an opt-in feature. Those who have their identities confirmed by the platform’s KYC process will be able to mint the token onto their digital Binance wallets.

Read more: BNB Chain – Here’s What You Need to Know About the World’s Fifth-Largest Token

BAB will thus be used as KYC credentials, indiciating when users’ identites have been verified. Third party protocols can use BAB to airdrop NFTs and avoid bots whilst DAOs can use BAB to enable voting.

Soulbound tokens (SBT) was created at the start of 2022 and introduced by Ethereum founder Vitalik Buterin. SBTs are non-transferable tokens representing credentials and affiliations.

Binance’s move follows an investigation that explored its association with illicit activity including fraud, money laundering and terrorist financing.

Read more: “Bailouts Don’t (Always) Make Sense”: Binance’s CZ Weighs in on Industry Lifelines

Reuters published a series of reports on the platform, claiming Russian-language darknet market Hydra had links within Binance’s user base. The publication claimed Binance facilitated US$780 million in payments related to Hydra since 2017.

Binance said the claims were misleading, stating, ” Hydra was humongous and yes, it did business in Russia, so it’s like saying that Bank of America supports money laundering for drug cartels. It really paints this picture that “Binance knew this market was operating, so they must support it.””

Blockhead Team
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