Chainanalysis: s brief report about crypto laundering

o_e_l_e_o

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Quote from: mk4 on February 06, 2023, 09:28:15 PM

My assumption is just that once on/off ramps aren't necessary(when bitcoin/crypto gets actual heavy adoption in terms of day-to-day payments/transactions), laundering will rise/skyrocket simply due to the fact that they wouldn't need to touch KYC'd platforms.

That's a fair point. My counter would be that people aren't laundering billions of dollars to then spend a few hundred bucks on day to day transactions like buying groceries or paying for gas. If you want to spend that kind of money, then you are looking at buying mansions, yachts, that kind of thing. I'm not exactly au fait with that kind of thing, but I imagine KYC and AML are fairly heavily involved.

Quote from: NotATether on February 07, 2023, 04:59:38 AM

Would be ironic if they just labeled user-privacy enhancing in the "stolen funds" category.

I mean, as I pointed out above they are already labeling any bitcoin touched by a company which the US government has sanctioned as "illicit". So the vast majority of bitcoin bought by Russian citizens via Russian exchanges is now "illicit", through absolutely zero fault of their own.

Imagine all your money suddenly being declared illegal and unspendable, by either your own government or even someone else's government on the other side of the world. Bitcoin fixes this, if you just avoid centralized ~~scams~~ exchanges.

NotATether

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bitcoincleanup.com / bitmixlist.org

Quote from: BenCodie on February 05, 2023, 11:22:00 PM

Quote from: Oshosondy on February 05, 2023, 05:22:33 AM

Quote from: digaran on February 05, 2023, 04:46:16 AM

This is the result of Satoshi's vision! They just know how much, they don't know who is behind it.

But do you think crypto scam is more than fiat scam? Scam has always been existing before bitcoin was created.

I would imagine that what is considered laundering by governments and firms like chainanalysis, would not fit into the criminal definition of laundering - i.e, gaining from something illegal like scamming, hacking, drugs, etc and then trying to obfuscate the source of those funds. It's very possible that this statistic also includes transactions of people who are just trying to maintain their privacy without actually doing anything that would be considered criminal anywhere.

Would be ironic if they just labeled user-privacy enhancing in the "stolen funds" category.

Quote

To answer your question directly, fiat scam runs all the way to the top corporations whose products you probably use every day. "Scams" or anything that deceives and/or harms people to any scale, would be unparalleled when you compare cryptocurrency users and banks. Just take a look into HSBC's criminal history (and present), let alone any other bank. They are involved in more actual money laundering (let alone drug and other kinds of trafficking) than any statistic they could create and combine for the cryptocurrency market as a whole.

Most (young) people are resorting to online banking with fintechs because they don't trust the Big Old Banks anymore. Though it's more because those banks have crappy user experience and customer services than any knowledge about their past history.

mk4

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Quote from: o_e_l_e_o on February 06, 2023, 08:45:14 AM

I'm not sure that's true. If bitcoin was this magical panacea for money launderers, as the government and banks like to portray it as, then why isn't the vast majority of global money laundering already using it? There is plenty of volume and plenty of off ramps to support billions or even trillions of dollars in money laundering. The bottom line is that cash remains, by far, the chosen method of money launderers.

Yes, with more crypto usage there will be more money laundering, but I'm not convinced it will "skyrocket".

My assumption is just that once on/off ramps aren't necessary(when bitcoin/crypto gets actual heavy adoption in terms of day-to-day payments/transactions), laundering will rise/skyrocket simply due to the fact that they wouldn't need to touch KYC'd platforms.

Of course I do agree that cash is still the best for laundering.

o_e_l_e_o

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Quote from: hatshepsut93 on February 05, 2023, 02:54:00 PM

-snip-

Absolutely. As I said, difficult to answer since we don't really have comparable figures.

Quote from: mk4 on February 05, 2023, 10:01:15 PM

That is true. But it's minuscule simply because global usage of bitcoin/crypto for payments in general is minuscule. I expect usage for laundering purposes to skyrocket as bitcoin/crypto usage increases in the long-term.

I'm not sure that's true. If bitcoin was this magical panacea for money launderers, as the government and banks like to portray it as, then why isn't the vast majority of global money laundering already using it? There is plenty of volume and plenty of off ramps to support billions or even trillions of dollars in money laundering. The bottom line is that cash remains, by far, the chosen method of money launderers.

Yes, with more crypto usage there will be more money laundering, but I'm not convinced it will "skyrocket".

Quote from: Fundamentals Of on February 05, 2023, 10:12:48 PM

Money laundering is part and parcel of the package of cryptocurrency adoption. Bitcoin is a currency. There is no way to make sure every single Satoshi is used in the right and ethical way. Just like fiat itself.

Absolutely this. I like the way Andreas Antonopoulos put it when asked if it was a problem that bitcoin was used to by drugs. His answer was that drugs constitute the second biggest market in the world, and if you can't use your money in the second biggest market in the world, then what you have isn't money.

ABCbits

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Quote from: digaran on February 05, 2023, 01:56:38 PM

Quote from: ?? on ??

Firstly, chainanalysis is not a reliable source

Perhaps, but i'm not sure if better source which available publicly exist.

Quote from: digaran on February 05, 2023, 01:56:38 PM

secondly, what is considered money laundering in some jurisdictions could be a normal practice of circumventing financial sanctions in other jurisdictions.

That's true, Chainalysis is U.S. based and AFAIK U.S. has relative strict financial regulation.

Quote from: Despairo on February 06, 2023, 01:11:09 AM

Quote from: ?? on ??

It's not surprising centralized exchange (CEX) remain popular option as destination of illicit wallet. Although i wonder how much/little those funds managed to be detected by those CEX.

Why you're not surprising?

Because centralized service such as bank is popular option to laundry money in big quantity. For example, see "FinCEN files" or "Danske Bank money laundering scandal".

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Quote from: ?? on ??

It's not surprising centralized exchange (CEX) remain popular option as destination of illicit wallet. Although i wonder how much/little those funds managed to be detected by those CEX.

Why you're not surprising? I mean we're know CEX is the worst option for fraudster to cash out their illegal funds. There are a lot sources where CEX froze or confiscate someone funds, so they should learn from that and choose other method to cash out in anonymous.

Seeing how many fraudsters using CEX as a destination to store their illegal funds, it's mean CEX is the main problem where the illegal went to, but no government is planning to shutdown and investigate these top CEX. We've seen few mixers was got sanctioned by government.

BenCodie

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Quote from: Oshosondy on February 05, 2023, 05:22:33 AM

Quote from: digaran on February 05, 2023, 04:46:16 AM

This is the result of Satoshi's vision! They just know how much, they don't know who is behind it.

But do you think crypto scam is more than fiat scam? Scam has always been existing before bitcoin was created.

I would imagine that what is considered laundering by governments and firms like chainanalysis, would not fit into the criminal definition of laundering - i.e, gaining from something illegal like scamming, hacking, drugs, etc and then trying to obfuscate the source of those funds. It's very possible that this statistic also includes transactions of people who are just trying to maintain their privacy without actually doing anything that would be considered criminal anywhere.

To answer your question directly, fiat scam runs all the way to the top corporations whose products you probably use every day. "Scams" or anything that deceives and/or harms people to any scale, would be unparalleled when you compare cryptocurrency users and banks. Just take a look into HSBC's criminal history (and present), let alone any other bank. They are involved in more actual money laundering (let alone drug and other kinds of trafficking) than any statistic they could create and combine for the cryptocurrency market as a whole.

Fundamentals Of

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Money laundering is part and parcel of the package of cryptocurrency adoption. Bitcoin is a currency. There is no way to make sure every single Satoshi is used in the right and ethical way. Just like fiat itself. It is created with a good intention but it cannot be fully kept from being used by criminals.

I think there are leaps at certain points in the process. Suspicious sources for example doesn't mean the funds are involved in bad activities. Illicit could also be subjective.

mk4

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Quote from: o_e_l_e_o on February 05, 2023, 10:40:47 AM

It's probably worth putting that in context, though. Wachovia laundered $390 billion for drug cartels. Danske bank laundered $230 billion in Estonia. The entire $23.8 billion of the whole of crypto amounts to a fraction of the amount laundered in a single incident involving a single bank. It is absolutely minuscule in a global context.

That is true. But it's minuscule simply because global usage of bitcoin/crypto for payments in general is minuscule. I expect usage for laundering purposes to skyrocket as bitcoin/crypto usage increases in the long-term.

OcTradism

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Quote from: hugeblack on February 05, 2023, 03:08:59 PM

The noticeable thing is the disappearance of the percentage of dark markets, which means that most users do not have sufficient experience to use dark web networks or more complex technologies.

If they are normal people and don't have shady activities and sources of income, coins, they don't have to consider using dark markets.

It's not because of technical complexity but also risk of using dark markets too. However, if the coin source is dark, dark markets can be their first consideration and bring their coins to the light without mixing is not priority.

Quote from: o_e_l_e_o on February 05, 2023, 02:32:25 PM

Difficult to answer because we don't have those figures.

What we do know is that 2.7% of fiat GDP is involved in money laundering, whereas 0.24% of crypto transaction volume is illicit. So even when adjusted for volumes, fiat is over 10x "dirtier" than bitcoin.

The comparison presents a fact that cryptocurrency market is a favorite attacking target of governments and related parties. They want to shut it down or reduce its size so they tried to do as many attacks as possible. Even they have to distort facts to support their attacking attempts.

hugeblack

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Quote from: ?? on ??

It's not surprising centralized exchange (CEX) remain popular option as destination of illicit wallet. Although i wonder how much/little those funds managed to be detected by those CEX.

I was shocked by this percentage, I do not know, but it is stupid for someone, after the hack, to transfer his money directly to a central platform, which may have the option to freeze his money without any attempt to hide the effect.

The noticeable thing is the disappearance of the percentage of dark markets, which means that most users do not have sufficient experience to use dark web networks or more complex technologies.

hatshepsut93

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Quote from: o_e_l_e_o on February 05, 2023, 02:32:25 PM

What we do know is that 2.7% of fiat GDP is involved in money laundering, whereas 0.24% of crypto transaction volume is illicit. So even when adjusted for volumes, fiat is over 10x "dirtier" than bitcoin.

Transaction volume is way higher than global GDP. Visa reported $10.4T in transaction volume and $13T in transaction + cash volume in 2020. Global GDP was $85.5T in 2020. And Visa is just one of the networks - there's also Mastercard, Swift, direct bank transfers, Chinese payment systems and so on. Even if you think logically, if a product costs $1,000 there will be a much higher transaction volume tied to this product - buying materials, paying salaries to workers, selling it multiple times until it reaches the final customers and so on. And then there are transactions that are not tied to GDP directly, like investing, p2p transfers, shadow economy.

o_e_l_e_o

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Quote from: hatshepsut93 on February 05, 2023, 01:53:54 PM

This isn't the full context though. How much total value passes through banks and how much total value passes through Bitcoin? After answering that we can compare the relative share of illicit transactions in both networks.

Difficult to answer because we don't have those figures.

What we do know is that 2.7% of fiat GDP is involved in money laundering, whereas 0.24% of crypto transaction volume is illicit. So even when adjusted for volumes, fiat is over 10x "dirtier" than bitcoin.

Quote from: digaran on February 05, 2023, 01:56:38 PM

secondly, what is considered money laundering in some jurisdictions could be a normal practice of circumventing financial sanctions in other jurisdictions.

This is very true. Take a look at the top graph on the other Chainalysis report I just linked to above: https://blog.chainalysis.com/reports/2023-crypto-crime-report-introduction/. Of their "illicit" transactions for 2020, the largest share (44%) is due to "sanctions". The US sanctions Russian businesses, and so now all their transactions show up as "illicit", according to this US based company. Roll Eyes

pixie85

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Quote from: ?? on ??

Gov should understand that due to transparent nature crypto is not the best option for laundering

By laundering they probably also mean mixing stolen funds.

When a hacker steals from an exchange the coins are mixed again and again and divided into multiple wallets that eventually get accessed from a third world country and even when the wallet gets traced they won't know who took the money out. A hacker pays money mules to get cash out of ATMs or sells mixed coins on decentralized exchanges. Sometimes coins are exchanges into gift cards and other things and then sold on the black market mixed with legit gift cards paid with fiat money.

Laundering works if you do it right. It's not the best way to legitimize billions of dollars but for smaller numbers it can work.

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Quote from: ?? on ??

Firstly, chainanalysis is not a reliable source, secondly, what is considered money laundering in some jurisdictions could be a normal practice of circumventing financial sanctions in other jurisdictions. A BIG LOL for KYC is needed here.

hatshepsut93

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Quote from: o_e_l_e_o on February 05, 2023, 10:40:47 AM

It's probably worth putting that in context, though. Wachovia laundered $390 billion for drug cartels. Danske bank laundered $230 billion in Estonia. The entire $23.8 billion of the whole of crypto amounts to a fraction of the amount laundered in a single incident involving a single bank. It is absolutely minuscule in a global context.

This isn't the full context though. How much total value passes through banks and how much total value passes through Bitcoin? After answering that we can compare the relative share of illicit transactions in both networks.

Quote from: ?? on ??

It's not surprising centralized exchange (CEX) remain popular option as destination of illicit wallet. Although i wonder how much/little those funds managed to be detected by those CEX.

CEX is part of the laundering (maybe unknowingly, maybe not). If a bank sees a deposit coming from a CEX, they won't be as suspicious as seeing the same deposit coming from DEX or via cash. I think the other destinations like gambling, mining, DeFi still later end up in CEX or DEX.

electronicash

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the defi started only in 2020 and it's getting bigger each year. despite the KYC and regulations on CEX, it's still the one with the highest activity of laundering. when you know your data is with the exchange you normally will be afraid to violate laws, it's interesting how they classify an activity as laundering. they have some leads to investigate when CEX is the platform though.

o_e_l_e_o

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Quote from: mk4 on February 05, 2023, 03:51:51 AM

That's quite a huge increase, though it's nothing close to surprising.

It's probably worth putting that in context, though. Wachovia laundered $390 billion for drug cartels. Danske bank laundered $230 billion in Estonia. The entire $23.8 billion of the whole of crypto amounts to a fraction of the amount laundered in a single incident involving a single bank. It is absolutely minuscule in a global context.

Quote from: Poker Player on February 05, 2023, 04:22:34 AM

What I am thinking about is whether the criminals are retards who are leaving clear footprints to be tracked and whether what we have been told about mixers is a lie and they don't really protect your privacy. It is that these two things do not fit with what the article states.

Bit of both. You can see from the second chart, which ETF has shared above, that only around 10% of illicit funds are passed to a mixer. The majority of illicit funds go directly to a centralized exchange or to a DeFi exchange, the vast majority of which are also centralized and track everything their users do. So it is hardly surprising these criminals are easily caught. We also know there are plenty of not very good mixers (or even outright scams themselves) out there which can have their outputs and inputs correlated, and we also know that people often mess up and inadvertently recombine mixed coins with unmixed coins, rendering the whole mixing process useless.

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Quote from: mk4 on February 05, 2023, 03:51:51 AM

That's quite a huge increase, though it's nothing close to surprising. The more people learn about crypto and how they can use it to launder money, the higher the chart goes. Higher crypto usage guarantees a higher money laundering usage.

Some people wants to use crypto but they do not want to know how to avoid scammers and hackers, the number will grow because people are like that by ignorance.

Quote from: digaran on February 05, 2023, 04:46:16 AM

This is the result of Satoshi's vision! They just know how much, they don't know who is behind it.

But do you think crypto scam is more than fiat scam? Scam has always been existing before bitcoin was created.

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This is the result of Satoshi's vision! They just know how much, they don't know who is behind it.

Topic: Chainanalysis: s brief report about crypto laundering (Read 266 times)