Hackers stole $927 million through cryptocurrency exchanges in the first three quarters of 2018 alone, reveals the CipherTrace 2018 Q3 Cryptocurrency Anti-Money Laundering report.
The research found that 380,000 bitcoins (worth approximately $2.5 billion today) had been laundered by criminal sources between January 9, 2009 and September 20, 2018. CipherTrace also predicts the total amount of cryptocurrency stolen will rise to $1 billion by the end of the year.
The report is a first in offering an in-depth examination of cryptocurrency, criminal activity and AML regulations by jurisdiction. Within it, criminal activity relates to funding dark market sites, malware, extortion malware, terrorist financing and more.
'This research is the first major quantitative effort to measure the level of criminal activity to definitively characterize criminal bitcoin payments. CipherTrace Cryptocurrency Intelligence analyzed 45 million transactions at the 20 top cryptocurrency exchanges globally.'
Some key findings
- 97% of direct criminal bitcoin payments are sent to unregulated exchanges.
- 36 times more criminal bitcoin is received by cryptocurrency exchanges in countries where AML is either weak or not enforced.
- Cryptocurrency money laundering on top exchanges involves a significant amount of bitcoin—some 380,000 bitcoins or $2.5 billion at today’s prices.
- In the first three quarters of 2018, $927 million of cryptocurrency was stolen by hackers; since the Q2 report, CipherTrace have recorded new reports of $166 million.
“Different geographies are competing on regulations and trying to become ‘trusted’ digital currency hubs in order to grow their economies,”
The report emphasises the impact of AML regulations on reducing the amount of money laundered through cryptocurrency exchanges. CipherTrace finds that 79 countries must update their AML regulations to be able to pick up on drug dealing, suspicious transactions and other criminal activity.
“The regulators are still a couple of years behind because there are only a few countries that have really applied strong anti-money laundering laws... All exchanges get these money-laundered funds. You really can’t stop them,”
While Anti-Money Laundering (AML) regulations are effective in reducing criminal activity on digital currency exchanges, the data the report is examines is based on the transactions that 'CipherTrace was able to directly monitor and designate as criminal or highly suspect. There are likely 50% more criminal transactions than those that were traced for this report because criminals are typically very clever and deft at hiding their tracks. (p. 3).
CipherTrace develops cryptocurrency Anti-Money Laundering, cryptocurrency forensics, and blockchain threat intelligence solutions. Leading exchanges, banks, investigators, regulators and digital asset businesses use CipherTrace to trace transaction flows and comply with regulatory anti-money laundering requirements, fostering trust in the cryptocurrency economy. Its quarterly CipherTrace Cryptocurrency Anti-Money Laundering Report has become an authoritative industry data source.
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