How criminals laundered $2.8 billion USD using Bitcoin in 2019

One of the main reasons why governments and financial institutions refuse to accept virtual asset transactions is their potential use for illicit purposes. Cybersecurity firm Chainalysis shows this in its annual cybercrime report, in which it claims that criminal groups laundered nearly $3 billion USD using Bitcoin.

The researchers mention that most of these funds would have been transferred using two cryptocurrency exchange platforms: Binance and Huobi. “The withdrawal of illegal funds on these platforms grew considerably during 2019; we tracked at least $2.8 billion USD linked to criminal activities and transferred to cryptocurrency platforms,” the report says.

The cybersecurity firm mentions that there are around 300,000 accounts operated by criminal groups throughout dozens of cryptocurrency exchange platforms. In addition, the report mentions that about 75% of illegal funds circulate between Binance and Huobi, employing nearly 900 different accounts.

An elemental factor for the growth of these practices is the over-the-counter brokers activity, which are sought by criminal groups to acquire cryptocurrency without having to provide too many details about their activities: “In the over-the-counter market, customer identification measures are virtually inexistent, which is beneficial for criminal groups,” the report states.

In this regard, Samuel Lim, Binance compliance director, stated that while there are some cases in which criminals manage to infiltrate these exchange platforms, Binance has devoted time and resources to improve their identification processes in addition to the implementation of anti-money laundering technology.

However, it is a reality that the characteristics of virtual assets favor the interests of some criminal groups. Zherek Jakubchek, Europol’s cybersecurity analyst, recently commented on the difficulty of tracking illegal transactions using cryptocurrency, noting that, unlike virtual assets such as Bitcoin or Ethereum, Monero transactions are “virtually impossible to track.”

The International Institute of Cyber Security (IICS) has continuously monitored reports of security incidents related to the use of cryptocurrency; most of these reports include illicit activities such as money laundering, theft of digital assets and the use of cryptocurrency addresses to collect extortion payments and ransomware attacks.