The research company Chainalysis analyzed methods of laundering funds obtained illegally through cryptocurrency exchanges. According to the report, Binance and Huobi platforms are the most popular among criminals.
$2.8 billion worth of cryptocurrency flowed from criminal entities to exchanges in 2019. Our analysis suggests OTC brokers play a significant role in moving these illicit funds. //t.co/U4KfLJnCLm
— Chainalysis (@chainalysis) 15 января 2020 г.
Analysts noted that over the course of the year, exchanges became more and more in demand among criminals for money laundering.
According to Chainalysis, in 2019, exchanges received around $ 2.8 billion of illegal funds in bitcoins. More than 52% of these funds were sent to just two platforms – Binance and Huobi.
According to experts, more than 300 thousand accounts on these exchanges turned out to be connected with criminal activity. At the same time, 75% of the funds totaling $ 819 million were sent to only 810 wallets.
Chainalysis believes that most of these addresses belong to over-the-counter (OTC) brokers. Simplified requirements for passing KYC procedures allow them to help criminals launder funds on exchanges, analysts said.
“First, they exchange bitcoin and other cryptocurrencies for Tether as a stablecoin intermediary, before allegedly withdrawing funds to fiat,” the study said.
Such brokers also often make large transfers to each other in attempts to “trick” the software that analyzes blockchains.
Analysts have compiled a list of Rogue 100 of the hundred largest over-the-counter brokers who, according to experts, provide money-laundering services. 70 out of 100 work with the Huobi exchange. In total, during 2019, these 70 brokers received $ 194 million in bitcoins from criminal structures.
“It is interesting that neither broker from this list works with Binance, although it is possible that some of them also have accounts there or on other exchanges,” the analysts emphasized.
In response to the study, Binance announced that they intend to improve KYC and AML procedures to reduce the risks of money laundering through its platform.
At the same time, Chainalysis noted that not all over-the-counter brokers working with criminals were included in the list and many have yet to be identified, and their activity in the market is growing every year.
“The Rogue 100 are extremely active traders and have a huge impact on the cryptocurrency ecosystem. They’ve received steadily increasing amounts of cryptocurrency each month since late 2017, but their activity skyrocketed this year. They received more than $3 billion worth of Bitcoin over the course of 2019, and many of them played a substantial role in the PlusToken scam. Overall, the funds the Rogue 100 receive can account for as much as 1% of all Bitcoin activity in a given month.”
Last year, Bitaline and Bittrex exchanges introduced software for tracking suspicious transactions from Chainalysis.