Home Cryptocurrency News Bitcoin Cryptocurrency-Related Thefts and Money Laundering Spike in Early 2018

Cryptocurrency-Related Thefts and Money Laundering Spike in Early 2018

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The first half of 2018 has been troublesome for the cryptocurrency industry. Falling prices have made a lot of investors wary. An increase in cryptocurrency theft and associated money laundering have caused additional issues. Three times as much money has been laundered via cryptocurrency in 2018 compared to last year.


Cryptocurrency Money Laundering Concerns

A new report by CipherTrace outlines a dark first half of 2018 for all cryptocurrencies. Various exchanges and trading platforms have suffered from hacks during this period. Coincheck lost several hundred million dollars, and Bithumb lost money not that long ago as well. Affected users have been reimbursed in the process, yet it still remains a troublesome trend to keep an eye on.

The same report also touches upon money laundering. Without anonymity features, most cryptocurrencies don’t lend themselves to this specific purpose. Despite that fact, there has been a strong increase in cryptocurrency-related money laundering due to the spike in exchange hacks. With $761 million in stolen funds to contend with, the current situation doesn’t look promising.

CipherTrace indicates this figure is expected to rise throughout 2018. A total of $1.5 billion worth of cryptocurrency can end up stolen or laundered by late December. To combat this issue, the company will launch a new AML tool. This tool helps crypto-related businesses comply with local anti-money laundering laws, which should help beef up security.

 

Criminals Favor Cryptocurrency

Laundering cryptocurrency is not an easy process. Several service providers are identified in the CipherTrace report. First of all, there are the so-called mixing services. These platforms convert one cryptocurrency to another one in exchange for a modest fee. Criminals rely on this process to remove any “taint” from stolen cryptocurrencies.

Instant conversion systems are also growing in popularity among criminals. Companies such as ShapeShift allow for instant conversion between different assets. Albeit, this is offered in limited fashion, but it still allows for anonymous currency conversions in a few clicks. Most of those platforms do not perform KYC or AML checks, which is rather problematic in this regard.

Last but not least, exchanges play a role in money laundering as well. Any platform performing loose KYC and AML checks is at risk of getting caught up in this illicit behavior.  Addressing all of these concerns can only be done through new regulatory measures. Currently, exchanges, law enforcement, and governments are discussing the measures and regulations that can be implemented to combat illegal activity.

Do you think hacks and money laundering associated with cryptocurrency will be as prevalent in the last six months of 2018 as it was for the first six months? Let us know in the comments below.


Images courtesy of Shutterstock.

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