Criminals getting smarter in use of digital currencies to launder money

Platform Industry: Hackers and cyber security

Criminals are becoming more sophisticated in their use of cryptocurrencies to launder cash, with hundreds of millions of dollars of filthy funds last year flowing through electronic wallets that enable users to hide their trail, according to Elliptic.

At least 13% of criminal proceeds in bitcoin passed via solitude pockets – which make it harder to monitor cryptocurrency transactions – in 2020, up from 2% in 2019, according to a research by the electronic currency forensics firm.

While cryptocurrency trades are pseudonymous, they are recorded on a public ledger called blockchain which makes it easier to track fund flows. Over the past decade, law enforcement is now better at monitoring illicit activity on blockchains.

But solitude pockets, of which there are several forms, mix, mix and anonymise cryptocurrency trades, making it complicated to follow a money trail.

“It makes it practically impossible to track funds, especially if you do a series of transactions through privacy wallets,” said Dr Tom Robinson, chief scientist at Elliptic. This is a big challenge for law enforcement.

Much of the $120,000 in bitcoin raised in a hack of renowned Twitter consumers’ accounts in July went through a privacy wallet, as did a portion of the $280 million in crypto funds stolen from Asian exchange KuCoin in September, Elliptic found.

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The study also describes uses of decentralised exchanges – platforms which aren’t run by a particular business – to launder funds.

While the entire quantity of illegal activity in crypto assets has increased in absolute terms over the years, it accounts for less than 1% of all digital transactions, down from 35% in 2012, according to Elliptic.

The team at Platform Executive hope you have enjoyed the ‘Criminals getting smarter in use of digital currencies to launder money‘ article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Anna Irrera. Editing by John Stonestreet.

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