An estimated $1.36 billion worth of digital assets has been stolen in the first five months of 2020, CipherTrace has revealed.
In its latest report, “Spring 2020 Cryptocurrency Crime and Anti-Money Laundering Report,” the blockchain analytics firm takes a look at data related to digital currency crime and money laundering from January to May 2020. Here are a few key points from the report.
Fraud and misappropriation run rampant
According to CipherTrace, fraud and misappropriation account for $1.3 billion of the $1.36 billion worth of the money that originates from digital currency-related crime. CipherTrace says there is a correlation between digital currency fraud or misappropriation and the COVID-19 pandemic.
These findings by CipherTrace are similar to a previous warning from the Financial Crimes Enforcement Network (FinCEN) in the United States, which warned citizens that there is a strong correlation between coronavirus and digital currency-related scams.
The CipherTrace data notes that fraud and misappropriation, some of which can be attributed to coronavirus related fraud, accounts for roughly 98% of the total amount of money that stems from digital currency criminal related activity.
Less criminal money is going to digital currency exchanges
“The global average of direct criminal funds received by exchanges dropped 47% in 2019,” says the report.
While the total revenue collected by criminals from digital currency crimes is approaching a record high, the amount of money being laundered through digital currency exchanges has declined. CipherTrace believes that this may be because anti-money laundering laws that apply to digital currency exchanges have improved.
For instance, recently, we saw Canada update its Proceeds of Crime (Money Laundering) and Terrorist Financing Act to include virtual currencies. As a result, virtual currency firms in Canada have to abide by the same laws as all registered Money Service Businesses in Canada.
Cross-border transactions and Bitcoin ATMs
74% of the BTC moved in exchange-to-exchange transactions were cross-border. In addition, 88% of funds sent by U.S. BTC ATMs to exchanges in 2019 were sent offshore.
“Criminals are known to engage in jurisdictional arbitrage, where they take advantage of the discrepancies between regions with stronger and weaker crypto AML regulations,” the report notes.
A significant number of the interexchange and BTC ATM transactions that take place result in money being received by a recipient located outside of the United States. The reason for this may be because there is no uniform framework regarding digital currency trading, and therefore, some countries have created lax or optimal operating conditions for digital currency exchanges and consequently, for criminals looking to launder money via digital currency.
The CipherTrace report explores major developments, enforcement action, theft, scams, fraud, the global regulatory environment, and sanctioned countries. Read the full report here.
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