When cybercriminals commit crimes motivated by profit, they need a way to access their proceeds without leaving an incriminating money trail. To do so, they must use a money laundering strategy that disassociates their cryptocurrency from its criminal origins and eventually transforms it into spendable funds.
Cryptocurrency is increasingly being used in money laundering schemes. In fact, according to a recent paper, it is the preferred method of laundering crime proceeds in the Dark Web. The authors of the paper, which was recently published in the journal Blockchain, studied the services offered on underground Bitcoin laundering markets to identify which were most effective at laundering cybercrime proceeds.
The paper analyzed five mixing and five exchange services that are available on the Dark Web. It found that mixing services were more efficient at cleaning cryptocurrency, and that their success was primarily driven by the service’s reputation and fee structure. Mixing services, or tumblers, mash up cryptocurrency transactions and return them to their original senders untraceably. A well-designed mixer can mask more than half of the original cryptocurrency’s value, which makes it very attractive to criminals.
Another popular method for committing crypto fraud involves buying one cryptocurrency with another and then selling it for cash. Essentially, it is buying one coin and then using that to buy another cryptocurrency in an initial coin offering (ICO). This can help criminals avoid suspicion from the authorities because the transaction does not involve purchasing any products or services.
However, this approach is not as effective as others because criminals need to justify their illicit income in order to legitimize it and transform it into clean money. For example, they may claim that their stolen cryptocurrency came from a profitable business venture or currency appreciation. This can be difficult to disprove in a market where the value of an altcoin can change by the second.
One of the most 비트코인세탁 common ways to launder cryptocurrency is through online gambling and gaming platforms that accept bitcoin payments. This method is appealing to cybercriminals because it eliminates the need to travel across borders with expensive duffel bags full of money. Instead, they can conduct their gambling and gaming on a website that accepts crypto, purchase credit or virtual chips with it, and then cash out the profits right away.
Lastly, another popular cryptocurrency fraud method involves purchasing gift cards that can be redeemed for cash at a number of different stores. This is possible because many major retailers now accept crypto as payment for goods and services. The criminals behind this scheme are likely using online exchanges to convert their cryptocurrencies into prepaid debit cards. The cards can then be redeemed for cash at the merchants or handed over along with PINs to third parties.
The above is just a snapshot of the numerous ways in which criminals are using cryptocurrencies to commit fraud and other types of illegal activity. Nyman Gibson Miralis has extensive experience in digital currency, encryption and money laundering law and can provide expert advice and representation for clients with these needs.
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