New research shows that criminals are using crypto-brokers to launder hundreds of millions of dollars every year and especially in 2020, Chainalysis research showed Thursday.
A total of nearly 270 cryptomony platforms, many of which are linked to over-the-counter brokers, received $1.3 billion in illicit cryptomoney last year – about 55 percent of all criminal cryptomony flows identified by Chainalysis’s U.S. researchers.
A cipher address is a set of random letters and numbers that represents a location on a virtual network. Bitcoins, for example, can be sent from a particular address to other people on its network in a completely anonymous and encrypted manner.
The illegal use of encryption in different traffic has long worried regulators and law enforcement agencies, with both US Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde calling for tighter surveillance last month.
The calls for stricter rules came as major investors have stepped up their activities in Bitcoin, which has led to a 1,000% increase in cryptosurveillance since last March.
Bitcoin hit an all-time high of more than $50,000 on Tuesday after Elon Musk’s Tesla Inc. revealed a $1.5 billion purchase of Bitcoin, leading some investors to claim that cryptomoney will become a common asset class.
A report by @chainalysis indicates that the share of cryptomony transactions linked to criminal activity fell sharply last year 📉 Only 0.34% in 2020 compared to 2.1% in 2019, critics of #Bitcoinhttps://t.co/GsdhfiQaJO say.
– Cryptoast – Bitcoin & Crypto-currencies (@cryptoastblog) January 20, 2021
Yet virtual currency is subject to uneven regulation around the world and remains popular with criminals. This week, for example, the European police agency Europol said it helped arrest hackers suspected of stealing $100 million worth of cryptographic assets.
The Chainalysis study looked only at the crime that has its roots in the chain-of-custody ledger that underlies most cryptosystems, including scams, cyber heroes, ransom software and darknet markets used to buy contraband.
The services related to the exchange of cryptoskills are also linked to numeric addresses. Some may have inadvertently received illicit funds due to lax compliance controls, according to the study.
The true extent of money laundering and other crimes using cryptography is not known. The United States, Russia and China received the largest volume of digital currency from illicit addresses, reflecting their high shares of cryptographic transaction volumes.