Sunday, July 3

Money laundering, the flip side of cryptocurrencies and NFTs

A mobile phone shows an application to exchange cryptocurrencies

Blockchain technology is at its best. According to information from Coinmarketcap, the most important reference portal for cryptocurrencies, the total value of funds invested in cryptocurrencies in the world in December 2021 is estimated at about 2.1 trillion dollars. This amount exceeds that of the 12 largest banks in the world combined and represents almost twice the GDP of Spain. Likewise, NFTs, digital objects whose authenticity is certified by the blockchain, are sold for millions of dollars both on the internet and in prestigious auction houses such as Sotheby’s. Criminals, however, have also noticed this.

A report published by Europol alerts on the growing use of these technologies in the criminal world. An example of this is that, in September, the United States Office of Foreign Assets Control reported that it had blocked the assets of the Russian OTC digital platform Suex, which it was used to launder about $ 160 million.

According Chainalysis, a blockchain expert software company that works with the United Nations and Barclays, money laundering is one of the axes of digital and cryptocurrency-based crime: “The main objective of criminals who accept payments in cryptocurrencies for illicit goods is hide the source of its funds and convert it into cash as soon as possible, so that it can be spent or put in a bank ”, states a recent report from the company.

Ian Lee, co-founder of the cryptocurrency risk detection platform in financial institutions Merkle Science, has explained to Five days that one of the main reasons why decentralized finance is so popular is because it is deregulated: “This gives the possibility that criminals have full control over their assets, that they do not have to give their identity and that their records do not a single entity has them ”. According to Lee, criminals can hide from the authorities by using privacy coins What Currency, which are cryptocurrencies with an even higher level of anonymity, or employ programs to distribute their assets on many platforms at the same time and make them more difficult to detect.

The authorities, however, are also making progress in this field. Maxim Kon, consultant to the Swiss police and founder of the company compliance digital Cheksy, has indicated to this newspaper that companies have the possibility of reporting illegal activity and that the authorities may request information about transactions that appear dangerous or suspicious. According to Kon, forensics can collate transactions and attempt to trace users with information in the public domain even though they remain anonymous.

However, the specialist warns that totally “decentralized” platforms such as Uniswap may involve a greater risk, since it is not possible to go to a single company to request the information. Kon also draws attention to the use of NFTs for money laundering: “How much is the Monna Lisa worth? The value of art is subjective and with NFTs we cannot even assign a physical value to them, no one can determine the correct price. In this sense, criminals can use them for huge transactions. In an auction house you cannot sit in the audience and buy your own work, but this is happening with the NFTs ”, he warns.

Chainalysis claims that the main destinations where crypto assets are received from illicit sources are the US, Russia, China, the UK and Ukraine. In their latest annual report on cybercrime, the developers highlight the disproportionate amount of funds that Russia receives from the dark net. This is due to Hydra, the largest black market platform on the dark internet, which only operates in Russian-speaking countries. Likewise, China stands out for receiving higher funds from extortion for data hijacking, which, according to the company, could be due to the activity of Lazarus Group, a cybercriminals syndicate associated with North Korea.

“The problem comes when criminals have to use the money in the real world. As with cash, one cannot change millions into cryptocurrencies without going unnoticed. Assets are suspect. What if the police came to your house and found a briefcase with a million dollars? ”, Kon ironizes.

The main cryptocurrencies of the ‘dark web’

Bitcóin. The original cryptocurrency. It has been used for transactions on the dark web since shortly after its invention in 2008. As early as 2013 it was reported as the main currency used for operations on the Silk Road digital black market platform. According to the latest Europol report, it remains the main currency for illegal transactions and payments on the dark internet.
Currency. It is a privacy coin, a cryptocurrency with an even higher level of anonymity. Privacy is one of their highest priorities and they claim to have the ability to protect any user from court or even from “the death penalty.” According to Europol, many criminals convert funds received in bitcoin to monero to cover their tracks.
Dash. Formerly known as xcoin and darkcoin, it was one of the first to prioritize total anonymity of shipments. It is one of the most popular among criminals in Eastern Europe and the biggest competitor to monero on the dark web.
Ether. It is the second most used cryptocurrency in the world and belongs to the Ethereum blockchain company and network. It is used to send money and money laundering, but it is not accepted in many black markets of the dark web. Its technology is also used to create certificates of authenticity for NFTs.

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