Crypto’s dirty side: 270 addresses laundered $1.3bn in 2020

New research shows that criminals are using a small group of crypto brokers to launder hundreds of millions of dollars.

Calls for stricter rules have come as big investors have stepped up their embrace of bitcoin, turbo-charging a 1,000 percent rally for the world's largest cryptocurrency since March 2020 [File: Dado Ruvic/Reuters]
Calls for stricter rules have come as big investors have stepped up their embrace of bitcoin, turbo-charging a 1,000 percent rally for the world's largest cryptocurrency since March 2020 [File: Dado Ruvic/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 news agency showed on Thursday.

A total 270 cryptocurrency addresses, many connected to over-the-counter brokers, received $1.3bn in illicit digital coins last year — some 55 percent of all criminal crypto flows identified by United States 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 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 US, have stepped up their embrace of bitcoin, turbo-charging a 1,000 percent rally for the world’s biggest cryptocurrency since March of last year.

Bitcoin hit an all-time high of over $48,200 on Tuesday after Elon Musk’s Tesla Inc revealed a $1.5bn 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. On Wednesday, for instance, European police agency Europol said it assisted in the arrest of hackers suspected of stealing crypto assets worth $100m.

The Chainalysis study 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 US, Russia and China received the highest volume of digital currency from illicit addresses, reflecting their high shares of crypto trading volumes, Chainalysis said.

Source: Reuters

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