Wednesday, April 21, 2021

Crypto money laundering and theft reach $4.4 billion in 2019 – Report


MONEY laundering and theft through cryptocurrency has hit a staggering $4.4billion so far this year, according to a report released today. The dossier – issued by intelligence experts CipherTrace – also warns that terrorists are increasingly turning to cryptocurrencies to conceal their fundraising.

CipherTrace’s Q3 Anti Money Laundering (AML) report highlights that cybercrime amounts to the same figure as the GDP of Azerbaijan and accounts for two per cent of the market cap of all cryptocurrencies. However, the report also notes that, during the third quarter of 2019, crypto crime shrank for the first time in two years. Although, the figures are set against two huge anomalies earlier this year – the $192m collapse of QuadrigaCX and the PlusToken scam which accounted for $2.9bn.

The impact of criminal activity on the market has often been believed to be negligible, but many analysts are now subscribed to the theory that the PlusToken scam is responsible for BTC’s current low.

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During Q3 2019, cybercrime shrank massively with $9m losses attributed to Ponzi schemes and “inside jobs” while $6.5m was stolen from exchanges.

“This total of $15.5 million represents the smallest number of cryptocurrency crimes of any quarter in the past several years,” the report adds.

Exchange hacks, Ponzi schemes and money laundering aside, the CipherTrace AML also points towards a growing acceptance of widespread industry regulation as a reason behind the drop in criminal activity.

Another crime highlighted in the extensive report was the emerging trend of QR code fraud. Many users of cryptocurrency use the sophisticated barcode-like images to make purchases or transfer between wallets.

This, say the AML’s authors, could prove risky when unsuspecting users look to create a code.

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“Researchers from cryptocurrency wallet provider ZenGo have found that four of the first five Google search results for “bitcoin QR generator” led to scam websites,” the warning reads.

“When an unsuspecting crypto user tries to create a QR code for their own bitcoin address, the bogus site will instead create a QR code for the scammer’s wallet.”

Snapshot of the key trends:

  • CipherTrace launched a first-ever comprehensive investigation of cryptocurrency exchange Know Your Customer (KYC) compliance and found that two-thirds of the top 120 exchanges have weak policies.
  • Q3 saw an increasing regulatory clampdown on virtual asset transactions as regulators, crypto exchanges, banks and financial institutions prepare for the Financial Action Task Force (FATF) funds Travel Rule to take hold on cryptocurrency businesses.
  • In anticipation of the new FATF AML regulations, many cryptocurrency exchanges have preemptively jettisoned their privacy coins; yet, 32 percent of exchanges, including those determined to have weak KYC, still have privacy coins listed.
  • Although Q3 showed the lowest quarterly cryptocurrency thefts and scams in two years, the total number for 2019 still stands at a whopping $4.4 billion.
  • Terrorists, wise to blockchain forensics, are developing more sophisticated methods of obfuscating cryptocurrency funds flows for financing attacks and operations.

The full CipherTrace AMl can be read here.


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