Billions laundered through top crypto exchanges in 2019

Billions laundered through top crypto exchanges in 2019

While critics continue to squawk about illicit crypto activities on the darknet, billions of dollars are being laundered through crypto exchanges.

Unwitting players in the money laundering game

According to a recent report by Chainalysis, more than US$2.8 billion [AU$4.15 billion] in ill-gotten gains have been laundered through cryptocurrency exchanges. This marks a sharp increase from the $1.7 billion laundered through exchanges in 2018.

Chainalysis’ research revealed that the majority of the money laundering took place two of the biggest cryptocurrency exchanges in the space. More than 50% of the tracked funds were laundered through Binance and Huobi.

Binance and Huobi lead all exchanges in illicit Bitcoin received by a significant margin
Binance and Huobi lead exchanges in illicit Bitcoin received by a significant margin – Chainalysis

To be clear, the blockchain analytics company is not accusing the exchanges of being complicit in the money laundering. Instead, its researchers are positing that the facilitators are most likely Over the Counter (OTC) brokers.

OTC brokers facilitate trades between buyers and sellers who can’t – or don’t want to – trade on an open exchange and are a significant source of liquidity in the crypto market.

While most OTC brokers run legitimate businesses, many of them take advantage of their relaxed KYC requirements to help criminals launder their illicit funds.

Scammers raked in more than $4 billion in 2019

While 2019 has seen an up-and-down trend in the crypto market, it has also been the biggest year in terms of cryptocurrency scams. Reportedly, the scammers tripled their revenue last year and brought in $4.30 billion worth of cryptocurrency.

Ponzi schemes have vastly gained a large amount, of which 92% is from the bottom line total. Around 2.4 million individual transfers were made to Ponzi schemes, and it keeps on growing each year.

Moreover, blackmail scams have also played a massive role in increasing criminal’s revenue up to $22.5 million, which is four times more than that of 2018. Blackmail scams seem a great threat to the entire financial ecosystem, and it is spreading at an alarming rate.

Crypto usage on the Darknet doubles
Crypto usage on the darknet doubles – Chainalysis

Crypto usage on the Darknet doubles

After dropping a bit in 2018, darknet market sales surged by 70% in 2019, which translates to over $790 million worth of cryptocurrency. This is the very first time that the sales number has crossed the $600 million mark.

Moreover, the darknet markets have doubled their share of overall incoming crypto transactions, which have moved from 0.04% in 2018 to 0.08% in 2019.

Despite the increase, however, actual cryptocurrency usage on the darknet is a far cry from critics’ claims, which would have one believe that cryptocurrency is almost solely used in criminal transactions.

Last month the Qatar Financial Centre (QFC) – Qatar’s financial regulator – banned cryptocurrency trading outright. This comes nearly two years to the day since the country’s central bank declared Bitcoin trading to be illegal.

“This cryptocurrency is highly volatile and can be used for financial crimes and electronic hacking as well as risk loss of value because there are no guarantors or assets,” a spokesperson for the bank said at the time.

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