CipherTrace Crypto AML Report Details $4.3 Billion in Schemes

[jjbanks994]

Ciphertrace's AML Report for Q2 was just published and is important to see the alarming numbers. Thefts and scams have reached $4.26 billion in aggregate for 2019.

Ciphertrace also notes that the new FATF travel rule presents a major hurdle for exchanges which I would be interested to see how this plans out. The report also that Bitcoin is still the main crypto used in the dark web.


https://ciphertrace.com/q2-2019-cryptocurrency-anti-money-laundering-report/

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[avikz]

The numbers have sky-rocketed because of some big exchange hacks in 2019. This continues to be a roadblock for the mass crypto adoption because till date, the authorities could not nag-down any of these hackers till date! Then we have mixer websites which are allowing them to safely transfer those bitcoins to the respective addresses to safely launder the money as per the hacker's requirement. Just look at the highlights from the report below,

Q2 Highlights
Thieves and scammers stole more than $4.26 billion from cryptocurrency exchanges, investors, and users in the first half of 2019.
Users and investors lost approximately US$2.9 billion as “South Korean” Plus Token app and exchange went offline; Chinese police arrested six Chinese nationals in Vanuatu as the alleged perpetrators.
Hackers used advanced cyberattack to steal $44 million from world’s largest cryptocurrency exchange, Binance.
Update from Canadian court on QuadrigaCX collapse reveals long history of misappropriation of user funds by QuadrigaCX founder.
Japanese exchange BITPoint hacked for $30 million.
BestMixer mixing service seized by law enforcement authorities.
European authorities seized three dark web markets and assets.
CFTC charged Control-Finance in $147M Ponzi scheme.
Facebook shook up crypto economy and woke up policy makers with Libra announcement.
SIM Swapping victim won $75.8 million judgement against hacker.
More sophisticated exchange hacks used advanced simultaneous takeovers of user and admin accounts.
SEC sued Kik over $100 million unregistered ICO.
CipherTrace research shows Bitcoin still dominates payment method in dark markets despite advent of privacy coins.
Hack may have caused Bitcoin flash crash on Kraken.
European authorities made arrests in two major typosquatting scams that cost exchange users tens of millions.
$23 million in Bitcoin lost and co-owner found dead after Polish exchange Bitmarket shutters due to “liquidity issues.
Iran accused US of attempting to block its virgin Bitcoin as means to compensate for financial hit from sanctions.
UN published report on North Korean government hackers stealing $571 million from Asian exchanges to fund WMD and compensate for sanctions.

The crypto market is still a jungle! I agree that FATF guidelines are harsh for exchanges to follow, but it would make the entire ecosystem somewhat secure than what we have now!

[Harlot]

I can stomach the 10,000$ threshold that they have set before for AML procedures but 1,000$? Isn't that a bit too much of a decrease for both AML and Counter-Terrorism Financing procedures, yes sure you will prevent the bad guys from doing illicit activities but also it will affect the innocent people trying to go cashless or cardless with this kind of limit. I can say that if this ever push through we will have a major step backwards when it comes to mass adoption as giving a low limit would also discourage spending for a lot of people.

[jdarren]

It's the FATF who advised the $1,000 threshold and I think it's wise of Ciphertrace to try and be the bridge between regulators and people's privacy. In their report they mention finding a 'workable solution' that requires an innovation such as cryptographically controlled methods to securing information which is what Ciphertrace is trying to provide.

[akeegan]

I don't think exchanges realize that they have to adhere to the FATF rule

[Theb]

AML and KYC procedures are not that even as hard and time-consuming compared to when opening an account to a brokerage firm to trade stocks. I remembered that when I opened my account in a brokerage firm a physical appearance is a requirement for you to submit your KYC documentation and that happens yearly as compared to most crypto-exchanges where you submit it online. So really now if things got more stricter in the industry regulation-wise I think that this will just separate the market more down to local exchanges having similar requirements on what the SEC will ask them to do so. The sad part about that is the price on each market will have a disparity as what we are seeing now in Korean and Japanese exchanges.

[ccryptopark]

AML and KYC procedures are not that even as hard and time-consuming compared to when opening an account to a brokerage firm to trade stocks. I remembered that when I opened my account in a brokerage firm a physical appearance is a requirement for you to submit your KYC documentation and that happens yearly as compared to most crypto-exchanges where you submit it online. So really now if things got more stricter in the industry regulation-wise I think that this will just separate the market more down to local exchanges having similar requirements on what the SEC will ask them to do so. The sad part about that is the price on each market will have a disparity as what we are seeing now in Korean and Japanese exchanges.

That's a really good point. I have a strong feeling that regulations are going to take place regardless to what extent I think that's going to be a case by case basis. Do I think the crypto community is more well versed in blockchain than say regulators? Absolutely. I think we'll need AML companies like Ciphertrace that can bridge the two.

[teddyelwyn]

From the sounds of it the travel rule is applicable to all exchanges. I don't know what the case is if they don't play by the rules from regulators. I do know however that Ciphertrace is working to create a privacy enhanced compliance to adhere to this rule https://ciphertrace.com/ciphertrace-and-shyft-partner-to-address-the-new-fatf-virtual-currency-travel-rule/

[hugeblack]

The report appears to be misleading and contains too much incorrect information.
Initially, it talked about AML, and then the report went on to embezzlement, scam and other things that talk about a third party and not cryptocurrencies in essence.

What is happening in the list above makes us emphasize the importance of third parties to be subject to laws and therefore issuing adequate regulations to protect citizens.

The value of the money has been confined to the dollar, but talk about cryptocurrencies, these currencies fluctuate in years, meaning that I can scam you for 10 BTC, which is worth 100,000 now and may be worth a million dollar in the future.

[wattcrypto]

The report appears to be misleading and contains too much incorrect information.
Initially, it talked about AML, and then the report went on to embezzlement, scam and other things that talk about a third party and not cryptocurrencies in essence.

What is happening in the list above makes us emphasize the importance of third parties to be subject to laws and therefore issuing adequate regulations to protect citizens.

The value of the money has been confined to the dollar, but talk about cryptocurrencies, these currencies fluctuate in years, meaning that I can scam you for 10 BTC, which is worth 100,000 now and may be worth a million dollar in the future.

That is an interesting point regarding the price of one BTC. I wonder if it had to do during the time of the scam? Granted I do not doubt that the number exceeds that 4 million mark with all the exit scams that has happened

[hugeblack]

That is an interesting point regarding the price of one BTC. I wonder if it had to do during the time of the scam? Granted I do not doubt that the number exceeds that 4 million marks with all the exit scams that have happened

As long as there are no legislative laws, Hacking platforms are useful for the platform and anyone who wants to manipulate the price.
So all this money cannot be considered stolen.
Therefore, it is better to move away from the central platforms and adopt decentralized methods in order to buy/sell cryptos (P2P one.)


Converting hacking numbers to dollars does not make sense. Numbers must be displayed in cryptos and then their value at the time of the hack and/or their current value.

[Kemarit]

Converting hacking numbers to dollars does not make sense. Numbers must be displayed in cryptos and then their value at the time of the hack and/or their current value.

Exactly, that's why crypto hacking, in terms of the amount is somewhat misleading and media or some company make it appears that people are losing in the billions years. 1 BTC is still 1 BTC no matter what. If they want to report some fiat numbers, then it should be peg on the current value at the time of the hack because we all know that the price will change in years. Although this is advantageous to the hackers, as some of them are not moving coins in years and waiting for the perfect time to exchange it to fiat.

[nrnahid]

I don't think exchanges realize that they have to adhere to the FATF rule.

[figmentofmyass]

I don't think exchanges realize that they have to adhere to the FATF rule.

technically they don't need to comply yet. for now it's just unenforced guidance from a membership organization. to carry the weight of law, the travel rule needs to be formally passed into law by individual governments. i expect that will happen in time, but everybody's still waiting.

i'm pretty sure exchanges see the writing on the wall though:

OKEX Korea Drops 5 Privacy Cryptocurrencies Citing FATF Rules
Binance Integrates Coinfirm’s AML Platform to Comply With FATF Rules