Criminals mix cryptocurrencies to hide revenue

When cryptocurrencies remain transparent on the blockchain, how difficult is it to hide when digital currency trading is happening in a not-so-legal way?

Well, to the point, how hard is it to money laundering your crypto? A new report said that cybercriminals are the most important demographic that uses services that make crypto transactions less traceable. Mixers, AKA tumblers, are a tool that collects funds distributed by multiple users and then mixes them together before writing to each user to withdraw the original amount they entered, minus a service fee.

A new report from the crypto analysis company Chain analysis released on Friday shows that by far the largest proportion of funds sent to mixers were from “illegal addresses”. Nearly 10% of all funds sent to mixers were from these suspected cybercriminals compared to only less than 0.3% mixer use among various addresses such as P2P exchanges and gambling platforms.

And it’s gotten worse this year. These illegal addresses accounted for 23% of all funds sent to mixers in 2022. These illegal funds came from sources such as fraud, stolen funds, fraudulent stores and more. The report’s authors note that many of these services do not require much in the way of customer identification. Several sanctioned entities such as The Lazarus Groupa North Korea-connected crew that is allegedly responsible for $ 625 million Axie Infinity hack, accounted for 30% of all sanctioned entities that sent funds to mixers this year. The Russian darknet marketplace Hydra accounted for over 50% of the funds sent to mixers. Hydra has become known for its involvement in crypto thefts, ransomware and more.

The report noted that North Korean-affiliated cybercriminals used mixers to try to hide as much money as possible compared to any other group.

Of course, not everyone uses mixers that indulge in criminal activity, especially since blockchain transactions are public, and after a good deal of effort, sporbar. People try to hide theirs transactions by oppressive governments could find the extra privacy offered by anonymous mixers useful. It is also important to note that mixers do not work as well for criminals as try laundering larger pots with funds, since inevitably some of the crypto a user puts into a mixer, if there are more than other users, will be some of the coins they started with.

However, as Chainalysis notes, “the data show that mixers currently pose a significant risk of money laundering, with 25% of the funds coming from illegal addresses, and that cybercriminals associated with hostile authorities exploit.”

There are different types of mixers, but long story short, those who use these services for illegal purposes, prefer those who are not centralized enough to record who put their coins and who took them out. Mixers themselves are considered “money transmitters” by the Financial Crimes Enforcement Network, the US agency that tracks economic crime for the Treasury Department. The report points out that some mixed services have been called out for illegal activity. Federal prosecutors charged Bitcoin Fog money laundering for alleged operation of an unlicensed broadcast service on darknet.

“We are not aware that any mixers are currently following rules related to [Know Your Customer] processes, source checks and other basic customer identification and due diligence regulations such as [money service businesses] is subject in most jurisdictions “, the report states.

Despite the fact that the price of crypto remains far lower than the peak in mid-2021, the rate of cryptocurrency has only increased. The Web3 security firm CertiK’s Quarter 2 report released on July 7 showed that the crypto scene had lost over $ 2 billion from April to June, with $ 870 million of this hit due to hacks and exploits. The loss in the first half of the year is more than the whole of 2021 combined.

The safety report notes that two of the most common attack Flash loans and phishing scams are carried out mainly on platforms such as Disagreement or Telegramwhich does not have any Twitter-like “verified account” systems in place.

And what does it offer the rest of the year? CertiK’s report predicted an increase of 223% in lost funds from attacks compared to last year. So I guess we’re all looking forward to it.