Rosy times for cybercriminals. The analytics company Chainalysis has traced $ 2.8 billion of Bitcoin that cybercriminals are believed to have transferred to crypto exchanges in 2019. More than half of the loot went to Binance and Huobi accounts.
It is not a novelty that cryptocurrencies can be used to a large extent for money laundering. How Chainalysis finds, however, there has been an increase in illegally looted crypto funds since the beginning of 2019. Of the $ 2.8 billion total, approximately 27.5 percent of this amount went to Binance and 24.7 percent to Huobi. The report says:
In total, just over 300,000 individual accounts with Binance and Huobi received Bitcoin from criminal sources in 2019.
Chainalysis has determined that 75 percent of the total went to 810 of the accounts, which received more than $ 100 billion in Bitcoin in 2019. According to Chainalysis, these accounts are likely to belong to over-the-counter OTC brokers.
KYC – Know Your Criminal?
Even though Huobi and Binance about know-your-customer procedures (KYC) that identify users, these requirements are lower for OTC desks. SThe aforementioned OTC desks are trading platforms on which securities can be offered that are not listed on the regular stock exchanges. The low KYC requirements favor OTC desks that specialize in money laundering, says Chainalysis.
In a statement to Chainalysis, Samuel Lim, Binance’s Chief Compliance Officer, said:
We will continue to improve our own KYC and AML technology, as well as the tools and third-party partners we work with to further strengthen our compliance standards.
OTC brokers act as intermediaries between buyers and sellers who cannot or do not want to trade on a stock exchange. They generally have significantly lower KYC requirements than the exchanges on which they operate. Traders particularly use the services of OTC brokers when they want to liquidate large amounts of crypto at a negotiated price. Cryptocurrencies like Bitcoin are first exchanged for bridge currencies like Tether before they can be withdrawn in Fiat.