Most regulatory restrictions on crypto worldwide are being imposed in response to money laundering techniques associated with cryptocurrency industry. A recent research by Chainalysis indicates that two thirds of all cryptocurrency-related money laundering operations in 2018 were carried out through popular crypto exchanges.
The research shows that 64% of dirty coins were laundered through the world’s leading cryptocurrency trading platforms, with over $1 billion worth of crypto being washed in such a way during the last year alone. According to Chainalysis, the most common money laundering scheme involves trading ill-gotten coins for anonymous cryptocurrencies with their subsequent conversion to fiat money.
The research further specifies that peer-to-peer (p2p) exchange services are responsible for laundering another 12% of stolen cryptocurrency.
“A majority of illicit funds actually flow through either exchanges, or peer-to-peer exchanges, with the rest flowing through other conversion services such as mixing services, [Bitcoin] ATM’s and gambling sites,” – the researchers conclude.
According to Chainalysis, the laundering scheme closely resembles the one used in laundering fiat money and comes in three stages: placing dirty funds on a platform, mixing them, and then integrating laundered amounts into real economy through business investments.
Another recent research by Chainalysis suggests that just two major hacking groups could be responsible for stealing over $1 billion in crypto worldwide.