Digital coins that were previously obtained illegally are most often resold. Therefore, absolutely any user can receive such funds in exchangers, on exchanges or as payments for goods sold or services rendered
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A dirty cryptocurrency is a big threat to all assets. If the investor accidentally got coins that were once stolen from other exchanges or digital vaults, then they can “stain” other assets in the user’s wallet. As a result, exchanges will consider these funds suspicious and may not accept such coins or even block the account.
Also, cryptocurrency can be considered “dirty” if the funds are directed to a suspicious account. For example, in late January, a Twitter user with the nickname Ronald McHodled announced that the Paxos exchange had blocked the withdrawal of his funds. Representatives of the exchange explained their actions by the fact that Ronald McHodled tried to send coins to the address that belongs to the service mixer.
Mixers are special programs and anonymization applications that divide transactions into small amounts and move them between different addresses several times to complicate or make it impossible to track transactions on the blockchain. If the platform client uses mixers, then this is perceived by the platform as an attempt to launder money.
Despite the fact that the policy of large exchanges is getting tougher every year, cryptocurrencies obtained illegally continue to flow on various platforms. Last year, about $ 2.8 billion in BTC were conducted on the exchanges on illegal exchanges, Chainalysis analysts wrote about this.
According to them. almost 30% of such transactions were made by the well-known Binance platform, and about 25% of transactions with infected coins were made on the Huobi exchange. It is almost impossible to determine how much “dirty” cryptocurrency is currently in circulation, however, it is worthwhile to understand that there are quite a few such coins, given the theft of $ 473 million in BTC on MTGOX and $ 533 million in NEM cryptocurrency on the Coincheck exchange and other hacker attacks on the crypto platform .
How to protect yourself from a dirty cryptocurrency
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Since the beginning of this year, the risk of obtaining digital coins obtained illegally on large and popular exchanges has become much lower. The thing is that on January 10, 2020, the fifth EU directive (AMLD5) entered into force, which is aimed at combating money laundering and financing. Therefore, now platforms that obey the law and implement AMLD5 should block the input and output of dirty coins so as not to let their customers down and continue to work.
Such exchanges should have a special department, whose specialists are engaged in tracking unusual and suspicious transactions 24 by 7, for this special programs and warning systems, bots and manual verification of transactions are used. On unregulated sites with a low degree of protection and a weak “know your client” (KYC) policy, it will be easier to buy or exchange cryptocurrency, however, there is a high probability of obtaining illegal digital coins.
If the user works with several platforms, both regulated and unregulated, then for security reasons, it is better to have several wallets and not mix cryptocurrencies received from reliable and unreliable sources. There are also special services that allow you to check the origin of coins. For example, the application Traceer.co, the Chain.so and Blockchair platforms, as well as Longhash and Crystal.
If the “dirty” coins still hit the wallet and the exchange blocked the account for this reason, then the user needs to be patient and prepare for lengthy proceedings. Panic and threats will not help, regulated areas operate according to certain rules.
The client should send a request to the support service, explaining the situation, most likely, the exchange will require a number of documents, including screenshots of transfers, information on how and where the funds were purchased. Representatives of the platform are entitled to request any data. If the user has the habit of recording all transactions and operations conducted with cryptocurrency, this can speed up and facilitate the investigation process.
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