CipherTrace: Wild West Days for Crypto Money Laundering Ending

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This week, blockchain investigator firm CipherTrace released its Q2 2019 anti-money laundering report.

The company’s latest high-level analysis comes as many things in the cryptoeconomy are changing — like the new FATF rules and Facebook’s planned stablecoin debut — while others aren’t changing at all, like the reigning dominance of bitcoin (BTC) in dark markets.


As tides in the ecosystem shift and awareness grows, it’s imminently going to become increasingly difficult for cybercriminals to rely on cryptocurrencies, CipherTrace argued:

“All of these illicit funds need to be laundered, but bad actors will have a harder time doing so as tough new Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations passed in 2018 are coming into effect globally over the coming months. For example, in June 2019, the Financial Action Task Force (FATF) advised member nations to begin implementing its ‘Travel Rule,’ which applies to all cryptocurrency transactions over a $1,000 threshold.”

At the behest of the G20 group, that Travel Rule should become par for the course among major crypto exchanges going forward. Users sending large transactions from one trading venue to another will now need to have identifying information provided by the sending exchange to the receiving exchange.

For these platforms, the rule will be tedious to comply with, but it will have the effect of making it a lot more difficult for criminals to make off with their nefariously gained crypto.

Notably, last month CipherTrace partnered with blockchain identity project Shyft to collaborate on a service cryptocurrency exchanges can use to follow the FATF’s new Travel Rule while simultaneously ensuring users’ data stays private.

No Going Back from the Attention Libra Brought

With the unveiling of the Libra stablecoin plans earlier this summer by Facebook, a kind of tipping point has been reached for the cryptoeconomy. Major international authorities, many of which blasted the maligned social media network for proposing Libra, now can no longer afford to ignore the developments and implications churning out of the cryptocurrency ecosystem.

According to CipherTrace’s new report, such a dynamic is another reason why cybercriminals should feel increasingly uncomfortable about using crypto in the future. Facebook has brought the regulatory heat, and that heat seems primed to remain and intensify in the space, CipherTrace said:

“Libra raised awareness that crypto is here to stay and with major implications for the future of the global economy. It also punctuated the need for more sophisticated AML/CTF regulation as well new technologies capable of enabling compliance while preserving privacy.”

Bitcoin Remains Top Crypto for Dark Markets

According to CipherTrace’s new report, privacy coins like Monero and Zcash still aren’t gaining serious traction in dark web dealings, counter to what many might expect.

Bitcoin’s privacy is considerably inferior to the privacy protections Monero and Zcash make possible, but BTC is still the money of choice in these dark markets. Why? It appears to be because bitcoin is simply easier to use in these contexts, CipherTrace explained:

“[Our] results show that privacy coins are barely used in dark markets and at dark vendor sites (e.g. only 4% of instances involve Monero (XMR) […]What this suggests is that while privacy coins may seem like a boon to criminals, drug gangs and terrorists, the barriers to entry for buying and selling Monero and other anonymous tokens makes them impractical for most dark market purchases and ransomware payments. They are most useful as a payment rail and to obfuscate chain hopping to more liquid tokens.”

Of course, bitcoin mixers can provide users with privacy, but one can safely assume that not everyone on the dark web is resorting to mixers. In that sense, more and more dark web activities are having their transactions permanently open-sourced on the Bitcoin blockchain.


William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Biticoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

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