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Furthermore, expanding this group further, Chainalysis says that 1,867 addresses received 75% of all criminally-linked cryptocurrency funds in 2020, a sum estimated at around $1.7 billion. 270 responsible cryptocurrency money laundering Cryptocurrency: It’s a word that anyone who spends any time online is sure to have heard of by now. Decentralized digital cash like Bitcoin has made cryptocurrency, and by extension the blockchain, a hot topic for discussion, and the cryptocurrency known as Ethereum is one of the hottest.
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• This article was amended on 24 January 2022 because a heading said that the letter criticising Spotify came from “270 doctors”. As the piece stated, doctors were among the health and science specialists signing the letter.
270 addresses are responsible for 55 of all cryptocurrency money laundering
By Tom Wilson
3 Min Read
LONDON (Reuters) – Criminals are using a small group of cryptocurrency brokers and services to launder hundreds of millions of dollars of dirty virtual money, research shared with Reuters showed on Thursday.
Just 270 cryptocurrency addresses, many connected to over-the-counter brokers, received $1.3 billion in illicit digital coins last year – some 55% of all criminal crypto flows identified by U.S. blockchain researcher Chainalysis.
A cryptocurrency address is a set of random letters and numbers that represents a location on a virtual network. Bitcoin, for instance, can be sent from a particular address to others on its network.
The illegal use of cryptocurrencies has long worried regulators and law enforcement, with U.S.
Chainalysis said some had such a high percentage “that it seems impossible the activity could be inadvertent, or that the service could even continue to operate without serving cybercriminals.”
The researchers also suggested that many “deposit addresses belong to third-party services who, sometimes explicitly or implicitly, provide money laundering services to cybercriminals.”
These third-party providers are referred to as nested services, which operate within one or several larger exchanges, enabling them to tap into their liquidity and trading pairs.
“From a blockchain analysis standpoint, this means that by default, nested services’ transactions will show up as having been conducted on the underlying platform that hosts the nested service,” Chainalysis said in a statement.
Cryptocurrency Trading PlatformMOST READ270 responsible all cryptocurrency launderingRegulatory Watch News270 addresses responsible cryptocurrency launderingWith the high-quality AML data from Coinfirm and a secure oracle like Chainlink, users can get answers to these questions on demand with very little upfront integration work. It’s not hard to envision a scenario where a DEX or decentralized lending dApp uses a Chainlink oracle to bring an AML risk report on-chain to decide if an address is blacklisted before executing a transaction. Similarly, a bank could automatically trigger an off-chain payment for a smart contract once it has cross-referenced the address against OFAC lists and Coinfirm’s AML risk scores.
The Chainalysis study here only covered crime that originates on the blockchain ledger that underpins most cryptocurrencies, including scams, cyberheists, ransomware and darknet marketplaces used to buy contraband.
Also linked to the digital addresses were services connected to cryptocurrency exchanges. Some may have received illicit funds inadvertently due to lax compliance checks, the study said.
The true scale of money laundering and other crime using cryptocurrencies – for example where criminals use bitcoin to launder traditional cash – is not known.
The United States, Russia and China received the highest volume of digital currency from illicit addresses, reflecting their high shares of crypto trading volumes, Chainalysis said.
Reporting by Tom Wilson.
Bitcoin, for instance, can be sent from a particular address to others on its network.
The illegal use of cryptocurrencies has long worried regulators and law enforcement, with US Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde both calling for tighter oversight last month.
The calls for stricter rules have come as bigger investors, especially from the United States, have stepped up their embrace of bitcoin, turbo-charging a 1,000% rally for the world’s biggest cryptocurrency since March last year.
Bitcoin hit an all-time high of over $48,200 on Tuesday after Elon Musk’s Tesla Inc revealed a $1.5 billion bet on the coin, leading some investors to claim cryptocurrencies were set to become a mainstream asset class.
Yet virtual money is subject to patchy regulation across the world, and remains popular with criminals.
But while you’d expect that the money laundering resulting from such a broad spectrum of illegal activity to have taken place across a large number of services, Chainalysis reports that just a small group of 270 blockchain addresses have laundered around 55% of cryptocurrency associated with criminal activity.
Furthermore, expanding this group further, Chainalysis says that 1,867 addresses received 75% of all criminally-linked cryptocurrency funds in 2020, a sum estimated at around $1.7 billion.
“This level of concentration is greater than in 2019,” Chainalysis researchers said in a report published last week.
But while you’d expect that the money laundering resulting from such a broad spectrum of illegal activity to have taken place across a large number of services, Chainalysis reports that just a small group of 270 blockchain addresses have laundered around 55% of cryptocurrency associated with criminal activity.
Furthermore, expanding this group further, Chainalysis says that 1,867 addresses received 75% of all criminally-linked cryptocurrency funds in 2020, a sum estimated at around $1.7 billion.
“This level of concentration is greater than in 2019,” Chainalysis researchers said in a report published last week.
Law enforcement agencies have forced criminals to obfuscate the sources of their money.
“Instead, they rely on a surprisingly small group of service providers to liquidate their crypto assets,” Chainalysis said. “Some of these providers specialise in money laundering services while others are simply large cryptocurrency services and money services businesses (MSBs) with lax compliance programmes.
“Investigators could significantly damage cybercriminals’ ability to convert cryptocurrency into cash by going after these money laundering service providers, thereby reducing the incentives for cybercriminals to use cryptocurrency in the first place.”
This is not the first time that cryptocurrency has been linked to criminal activity.
For instance, the US has introduced requirements for crypto exchanges trading in the country to include know your customer (KYC) checks.
When the Digitex exchange suffered a breach in 2020 that compromised its customers’ data, the CEO Adam Todd responded by cutting off all KYC checks for the exchange.
Noting that this would mean trading in the US would become illegal, Digitex banned US-based users from using the service by restricting American IP addresses and making people check a tick box to say that they are not from the country.
When explaining his decision, he argued that the notion that people would use crypto exchanges to launder money was “ridiculous.”
“People are not laundering ethereum into DGTX to fund international terrorism,” Todd argued. “[I] just sound stupid even saying that statement. It’s fucking ridiculous to even say it.
Common examples of nested services include [over the counter] brokers like itBit, nested at Paxos, and instant exchangers like Changelly, nested at HitBTC.”
The report also said that mainstream cryptocurrency exchanges were increasingly being used by criminals to launder their illicit cash.
Chainalysis noted an increase in risky services such as high-risk exchanges, gambling platforms, mixers and service providers headquartered in high-risk jurisdictions.
Scammers were particularly keen on utilising gambling platforms to launder their ill-gotten gains.
Looking at countries, the researchers found that ten countries received the highest volume of cryptocurrency from illicit addresses: the US, Russia, China, South Africa, the UK, Ukraine, South Korea, Vietnam, Turkey and France.
“Money laundering is the key to cryptocurrency-based crime,” Chainalysis said.
Who are the money laundering service providers? It said: “We believe the growing concentration of deposit addresses receiving illicit cryptocurrency reflects cybercriminals’ increasing reliance on a small group of OTC brokers and other nested services specializing in money laundering.”
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While ED continues to summon Bhardwaj’s relatives and others allegedly involved in the scam, Pune Police recently arrested two cybersecurity experts, Pankaj Prakash Ghode (38) and ex-IPS Ravindranath Prabhakar Patil (45), for illegally transferring crypto assets worth INR 20 Cr to their own wallets which were recovered during the investigation. Blockchain Technology and Cryptocurrency I may be misunderstanding, i thought any crypto transaction could be viewed by anyone through various ‘block explorers’.
