WAYS CRIMINALS LAUNDER MONEY WITH CRYPTOCURRENCIES
Bitcoin and other cryptocurrencies have become a staple in cybercriminals' toolkits, with criminals increasingly using them to launder money. Criminals use a variety of methods to conceal the source of illicit funds by taking advantage of the anonymity provided by cryptocurrencies.
What are some of the ways that cybercriminals use cryptocurrencies to launder money? Continue reading to find out the answer to that and other questions.
Bitcoin is appealing to money launderers because it is easier to launder money with cryptocurrencies than with other methods. Criminals in movies frequently move illegal funds across borders in duffel bags or suitcases to avoid detection; however, this is not realistic in real life.
Instead, thieves may easily launder Bitcoin and convert it to cash through online exchanges. After all, online transactions are borderless, removing the necessity for the perilous business of transporting physical money from one location to another.
Furthermore, because the public addresses used in these transactions aren't recorded in an individual user's name, cryptocurrencies allow some anonymity.
Despite the fact that all Bitcoin transactions are publicly recorded on the blockchain, only the individual who carried out the transaction has access to it.
When utilizing BTC to launder money, criminals employ a variety of techniques to avoid detection, with the goal of making it nearly impossible to trace the origin and destination of illegal transactions.
They can pay out without fear of being caught once the money has been laundered. Here are a few of the most popular methods criminals use to launder money with Bitcoin.
Dark Exchanges
Unregulated cryptocurrency exchange (dark exchange)
Many uncontrolled cryptocurrency exchanges do not conduct extensive identification checks, despite the fact that many big crypto exchanges have enacted anti-money laundering and know your customer policies.
On a dark exchange, frequently exchanging one form of cryptocurrency for another might gradually clean the coin. Without the use of a mixing service, criminals can safely transfer it to an external bitcoin wallet.
Converting cryptocurrencies to cash is another possibility. This is less common, though, because most unregulated exchanges lack fiat markets, and when they do, they are short-lived.
Nested Services
This broad group of services is provided by one or more exchanges. They exploit the exchange hosts' addresses to gain access to exchanges' capacity to instantly convert coins to cash and vice versa and take advantage of trading opportunities For nested services, certain exchanges have lax compliance regulations, which unscrupulous actors take use of to launder money.
When nested services execute a transaction, it is recorded in the blockchain ledger under the exchange's address rather than the address of the nested services or individual. The most common type of nested service is over-the-counter (OTC) brokers.
Criminals can trade significant sums of bitcoin secretly using OTCs, which provide direct trades between two parties outside the exchange.
These deals are safe and rapid, and OTC brokers are compensated for locating counterparties for transactions, but they are not involved in the negotiations. The assets are transferred through the OTC broker if the parties agree on the terms of the transfer.
Gambling and gaming websites
Gambling and gaming platforms frequently accept Bitcoin or other cryptocurrencies as payment, making them a popular choice for cryptocurrency money launderers.
Money launderers buy credit, virtual chips, or in-game currency on these platforms using crypto, then cash out after a few transactions. The website obtains legal standing once the money in an account is paid out.
Bitcoin Mixer
Tumblers, or Bitcoin mixers, combine criminal and clean digital assets from several addresses before redistributing them to new destination wallets or addresses.
Criminals frequently employ the practice of combining several digital assets to boost anonymity before moving payments to legitimate firms or major crypto exchanges.