Money Laundering Through Crypto Expected To Reach A New Height of $1.5 Billion Before The End Of 2018
It is no secret that the cryptocurrency platforms in the industry have been prone to fraud and hackers through the years. However, in a recent report from CipherTrace, the total amount stolen from exchanges in the first six months of the year is approximately three times the amount that was taken in 2017.
All of the information with CipherTrace shows that the current amount of money stolen from cryptocurrencies this year has reached approximately $761 million. Last year, the total by the end of the year was $266 million, though the CEO of CipherTrace, Dave Jevans, said that he expects 2018’s total loss to be at least $1.5 billion, based on the current rate of loss.
Jevans also has a role with the Anti-Phishing Working Group, and said, “We have seen a dramatic increase in cryptocurrency money laundering in 2018 so far. We’ve already tripled 2017 and we’re only halfway through the year.”
In his analysis, Jevans discussed their techniques for checking cryptocurrencies, like their anti-money laundering technology. The AML technology lets the company see how the coins have been moved through the industry, along with where they originated from and what exchanges were used for it. There is also a risk-scoring mechanism that gives full details on the address involved with the transaction, which is a major step in finding the source of the money laundering.
Even though Bitcoin transactions are fully recorded on the blockchain, there are ways that users manage to hide their transactions. Luckily, Jevans already has a plan setup, since they have technology that lets them find Bitcoin handlers that “scramble” their information, which usually occurs on the dark net. However, the opportunity for scrambling software is relatively easy to get ahold of, considering that there are some companies that even advertise these services on Google paid ads.
According to Jevans,
“These let people contribute funds into a combined pool that will scramble them up and try to use a different pool of liquidity that is not trackable on the blockchain, so there’s no linkage between them to deliver funds out to the receivers. These are written by highly skilled people who may have PhDs, that are actively trying to avoid tracing.”
Many cryptocurrency exchanges have been at risk lately, while some projects are completely pulling out the industry while they can. Some of the recently hacking victims include Mt. Gox ($350 million), Bithumb ($30 million), Coinrail ($40 million), and even Coincheck ($425 million). Some countries are trying to prevent the situation from getting worse with self-regulating bodies, like the Japan Virtual Currency Exchange Association. The FSA includes 16 different exchanges, but even their collaborative efforts have not been enough to stop any of money laundering with these security policies.