The problem of money laundering in the world of cryptocurrencies is a global phenomenon, which is fought by governments of many countries, using specialized cells. These struggles often resemble the proverbial "battle with windmills". Tracking down criminals consumes huge resources, not only financial but also human. Unfortunately, the phenomenon of money laundering concerns not only fiduciary currencies but also cryptocurrencies. Chainalysis, a blockchain analytics firm, released a report on Wednesday, January 15, 2020, showing that $2.8 billion in bitcoin was sent by criminals to cryptocurrency exchanges and bureaux in 2019. The vast majority of those transactions went to the two largest crypto exchanges: Binance and Huobi. "Over the entire past year, we recorded $2.8 billion in Bitcoins that were transferred from criminal entities to cryptocurrency exchanges and bureaux ", Chainalysis noted. 27.5% of this amount went to Binance and 24.7% to Huobi. Blockchain's transparency allows 'dirty' cryptocurrencies to be tracked Unlike traditional money laundering in the world of FIAT currencies, blockchain transparency allows us to track suspicious transactions. From this data, we can draw conclusions that can certainly help seal the entire cryptocurrency ecosystem. With this data, experts at Chainalysis, have located a small group of accounts belonging to users of Huobi and Binance exchanges. More than millions of dollars in BTC went into these accounts in 2019. The vast majority of these funds came from criminal entities. "Overall, just over 300,000 accounts on Binance and Huobi received bitcoin from criminal sources in 2019," Chainalysis notes. OTC brokers have specialized in money laundering According to the analyst firm, these large accounts likely belong to over-the-counter (OTC-"over-the-counter") brokers, who "are typically affiliated with an exchange but operate independently." OTC brokers mostly operate legitimate and registered businesses, but some have specialized in money laundering. Like cryptocurrency exchanges, OTC brokers must follow KYC procedures. Unfortunately, unlike exchange standards, OTC brokers' KYC requirements are less stringent. This allows for money laundering in the cryptocurrency space. Chainalysis has listed the top 100 OTC brokers that they believe are engaged in money laundering. The list was compiled manually, based on the experience of Chainalysis analysts. It is likely that some of the accounts on this list may belong to common cryptocurrency "whales". Interestingly, we can read in the report that a large part of the funds that were sent to the top 100 OTC brokers probably approached from the Plus Token pyramid scheme. Fortunately, year after year, cryptocurrency exchanges and exchange houses are tightening their KYC and AML procedures. It's time to look at OTC brokers to more effectively curb money laundering in the cryptocurrency world. Samuel Lee, CCO of Binance in response to the publication of the report stated: "Binance is committed to fighting cryptocurrency-related financial crime and improving the health of our industry. We will continue to improve our proprietary KYC and AML process, as well as the tools and third-party partners we work with to further tighten our compliance standards." How can we eliminate money laundering from the cryptocurrency ecosystem? We look forward to your feedback and suggestions. Tags aml bitcoin Chainalysis cryptocurrencies cryptocurrencies money laundering KYC money laundering money laundering
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