- Chainalysis published a study that suggests that nearly $2.8 billion is laundered in criminal activities between criminal entities through cryptocurrencies.
- 52% of that money being exchanged through crypto-exchanges Binance and Huobi.
A detailed study published on January 15 from blockchain analysis agency, Chainalysis, suggests that nearly $2.8 billion is laundered in criminal activities between criminal entities through cryptocurrencies, with 52% of that money being exchanged through crypto-exchanges Binance and Huobi.
Cryptocurrency exchanges have always been a gateway to money laundering, but they weren’t so popularly used as of recently since the beginning of 2019. It is quite surprising to see the amount of cash flowing through Binance and Huobi since both the exchanges are some of the largest in the world and are subjected to KYC regulations and are supposed to comply.
Chainalysis data also points out that over 300,000 accounts have been the outflow points for the laundered money. Still, due to the anonymous nature by which bitcoin transactions can take place, it is hard to identify the people behind the accounts.
Over The Counter
They have also managed to identify that it was “over the counter” (OTC) brokers who were taking in most of the illegally obtained bitcoin from criminal sources. OTC brokers act as mediators between buyer and seller of cryptocurrencies at a predefined price when the seller wants to liquidate large amounts of cryptocurrencies.
OTC brokers depend on exchanges, and most of them run legitimate businesses, but some of them have been a facilitator of money laundering services. Chainalysis has put together a list of the “Rogue 100” OTC brokers that have been linked to the illicitly obtained bitcoin that they tracked.
Their research finally concluded that a lot of the illegal funds run through OTC traders, who are also responsible for the majority of the trade volume for exchanges, and OTC traders also act in ways that seem to suggest illegal partnerships.
Chainalysis encourages law enforcement agencies to become more informed in blockchain analysis tools that will help them identify money laundering through cryptocurrencies much quicker. They also suggest exchanges to exercise more strict monitoring of OTC traders and other nested services that are operating within their boundaries. They must also perform rigorous KYC compliance checks on OTC desks.
Binance responded to the report with their chief compliance officer stating that the company is very committed to tackling financial crime through cryptocurrencies and that Binance is compliant with the rules and the KYC requirements of every jurisdiction that they operate within. They also hope to expand their tools and services to more effectively fight against criminal activities and money laundering that is being enabled through cryptocurrencies.