The anonymity that characterizes many cyber currencies has a negative connotation: it offers space for money launderers, which has always been a thorn in the side of the authorities. An analytics company has now set itself the task of tracing traces of missing bitcoins.
• Bitcoin loot washed for billions
• Binance and Huobi accounts in the game
• Increase in illegal transactions since 2019
Although digital currency favors cybercrime to a certain extent due to its anonymity factor, the transparency that is essentially provided by the underlying blockchain technology enables the money laundering ecosystem in cryptocurrencies to be examined more closely. The analytics company Chainalysis observed money laundering activities by crypto-veteran Bitcoin during 2019.
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Illegal bitcoins worth billions on well-known crypto exchanges
In an analysis, the company investigated criminal actions and thus observed illegally acquired bitcoins. Throughout 2019, Chainalysis tracked $ 2.8 billion in bitcoins. Over half of the transactions in these digital coins went through the two largest crypto marketplaces, Binance and Huobi. This fact is surprising, it is said, since these two prominent exchanges are subject to the KYC regulations. The analysts say that over 300,000 accounts have received Bitcoins of criminal origin. The majority of illegal bitcoins went to just 810 accounts – with a total value of $ 819 million, they can already be called BTC whales.
Who is behind the criminal crypto activity?
Chainalysis suspects that most of the accounts that devoured large amounts of illegal bitcoins were due to over-the-counter (OTC) brokers. “OTC brokers (Over The Counter) facilitate trading between individual buyers and sellers who cannot or do not want to trade on an open exchange,” the analysts explain. OTC brokers work in connection with the stock exchanges, but acted independently. The know-your-customer rules for OTC processes are therefore less stringent, many took advantage of this relaxation.
The problem, therefore, is that “while most OTC brokers do legitimate business, some of them specialize in providing money laundering services to criminals,” the study said. This part of the OTC brokers help criminals. This usually starts with the exchange of BTC or other coins in tether. This stablecoin is used specifically as a stable stopover and then, it is assumed, paid out in fiat currency. Chainalysis even claims to have found out that 100 of the major OTC brokers were allegedly involved in money laundering transactions – the suspected market participants had received large amounts of crypto from illegal sources. 20 of these OTC brokers have received $ 1 million or more in Bitcoin, the analyst said.
Security concerns have always been the biggest criticism, especially from institutional investors and regulators. In Germany, for example, a new law came into force only in the new year, which should regulate the crypto custody business and prevent money laundering – this is an EU-wide directive. The goal is to make trading in Bitcoin, Ripple, Litecoin and Co. more secure. It remains to be seen whether criminal activities can actually be reduced in 2020 or whether companies like Chainalysis will come up with similar statistics after the end of the new year.
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