A study undertaken by the Elliptic firm in combination with the Foundation for Defense of Democracies has found that criminal elements are getting smarter about money laundering cryptocurrencies by utilizing privacy wallets.
Reachers found that these types of practices are up 2% from last year, as fraudsters figure out how to wash their digital money in ways that confound regulators and investigators.
In the study, authors cite events like the Twitter hack and KuCoin breach where privacy wallets were effectively used.
“The study also describes uses of decentralised exchanges – platforms that are not run by a specific company – to launder funds,” writes Anna Irrera at Reuters.
It’s bad news for cryptocurrency fans that this type of activity is increasing. Although regulators have made headway in learning how to audit blockchain activity, money laundering remains one of the most feared downsides of any cryptocurrency, including Bitcoin, as public debate continues over whether the utility of use of these coins is worth the risks. Concerns about money laundering have led regulators to slow-walk all sorts of aspects of cryptocurrency regulation and accommodation, and concerns about money laundering have also spurred the investigations of leaders of exchanges like BitMex, where judges are looking at whether the lack of stringent AML/KYC protocols constitutes criminal behavior.
Noting the quick rise of Bitcoin and other “altcoins” in world economies, Elliptic and partners have undertaken to delve into how money laundering may effect the future of the blockchain.
“Criminals quickly sensed that Bitcoin has distinctive properties that serve their interest in evading law enforcement,” study authors write. “However, what analysts know about Bitcoin’s illicit applications is mainly based on anecdotal evidence, usually without supporting data, regional context, or trends over time.”
Check out this and other reports to understand some of the context of Bitcoin and crypto regulation and how it may affect your own strategy.
