Home
News
Elliptic, the blockchain analytics firm, has developed a tool to trace the stolen bitcoin funds. In 2016 over 1,00,000 bitcoin funds were stolen from Bitfinex. These launderers have now started moving these funds, which are being traced by the Elliptic technology.
- The bitcoins that were stolen from Bitfinex were first sent to the single wallet, amounting to 119,756 bitcoins
- The firm has used its investigation tool, Elliptic Forensics which will trace the outflow from the thief’s wallet
- The stolen funds were laundered in the darknet markets, privacy wallets, or exchanges
When more than 1,00,000 bitcoin funds were stolen in 2016, which were now worth almost $7million, from Bitfinex, the popular crypto exchange has made headlines. After five years out of the stolen bitcoins, 21% of the stolen bitcoins have been moved, and 4% have been either exchanged or moved from one wallet to another.
The matured crypto industry has come of age. This is evident from the slow movement of the stolen funds and how they have been laundered. These stolen funds have also been converted into other assets. All this means that law enforcement has made it very challenging for the defaulters to use the stolen cryptos or to make crime pay in crypto.
Movement of stolen bitcoin funds
The bitcoins that were stolen from Bitfinex were first sent to the single wallet, amounting to 119,756 bitcoins. It means that 79% of bitcoins are still in the wallet to date. In 2017, many transactions were done from the wallet until 2020, when multiple activities were recorded. At a value of $774 million, 12,241 BTC of the stolen funds were transferred. This movement was seen due to the increase in Bitcoin prices, which surged to 700% over the preceding year.
Past Vs Present
Earlier the stolen cryptos were sent directly to the exchange to be converted into dollars or euros. People were not that equipped to understand money laundering, regulations were not properly placed, and law enforcement did not have the capabilities to follow the money. But now, with the changing times, the change in thinking and technology has also developed. Law enforcement agencies and regulated exchanges use today’s blockchain analytics tools to find out the stolen funds. Today’s technology has given a hard time to the criminals, and they have to take extreme steps to cash out their proceeds.
New age tools by Elliptic
The blockchain analytics firm Elliptic has developed tools that have helped law enforcement to analyze the transactions related to the stolen BTC. The tool used to track the funds shows that most of the funds are held in a private wallet. The analysis mentions that the stolen funds will shortly be transferred to the third-party services to be laundered or cashed out.
The firm has used its investigation tool, Elliptic Forensics which will trace the outflow from the thief’s wallet. If the bitcoins are moved between the addresses and a small proportion is sent to a destination wallet at every step, it is known as a peeling chain.
Hence, Elliptic has made automated tracing techniques that can scan in milliseconds the source or the destination of funds in an address. This could be done even if a launderer does more complexity of transactions. These techniques are incorporated into the transactions and wallet screening tools. This will help the companies to screen crypto activity in an automated way.
The transactions that have been done were from the darknet markets (84%), privacy wallets (12%), and exchanges 4%. The tool by Elliptic helps to find out the exact amount to be traced from the darknet markets and privacy wallets.
Laundering of stolen funds begin
In 2017 the laundering of the stolen funds started at Alphabay, one of the largest darknet markets at that time. When it was shut down by law enforcement, the launderers went to Hydra, a Russian language marketplace. Hydra is now all set to become the largest darknet market. The agency has received $1.4 billion in bitcoin payments in 2020.
The next destination of the stolen bitcoins from Bitfinex is privacy wallets like JoinMarket and Wasabi wallet. The blockchain tracing can be prevented via these wallets, using a transaction named coinjoin.
In 2019, 612 of the bitcoins stolen were sent to the JoinMarket wallet. The amount of the stolen bitcoin was $4 million that was sent to JoinMarket wallet. In 2020, the launderers went to Wasabi wallet in which $5.3million stolen bitcoins were sent.
As of today, the stolen funds were laundered in the darknet markets, privacy wallets, or exchanges. It will take the authorities several years to streamline and trace the stolen bitcoins and shed light on the criminal activities.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
