Bitcoin And Monero Used To Launder $89M: Investigation

Fibo Quantum

Nearly $89 million USD worth of Bitcoin (BTC) and other top cryptocurrencies were mostly converted to privacy coin Monero (XMR) at 46 exchanges around the world in order to launder illicit funds, a Wall Street Journal investigation has found. The months-long investigation tracked 2,500 potentially criminal wallets and traced transactions dating back to 2016. These used 46 international and U.S.-based exchanges that concealed the original source of crypto funds, per Sept. 28 report.

The following exchanges were used in highest order of funds received: Binance, Bitfinex, ShapeShift, BTC-e, Bittrex, Changelly, Gemini, KuCoin, Bitstamp and HitBTC. Nearly $35 million in bitcoins and $16.4 millin in Ethereum (ETH) were converted to Monero.

Criminals included North Korean agents, credit card scammers and Ponzi scheme con artists who often turned to Colorado-based ShapeShift to clean the dirty money because the exchange allows users to anonymously trade Bitcoin and other cryptos. (On Oct. 1, ShapeShift will implement know-your-customer ID requirements.)

North Korean perpetrators of the WannaCry ransomware attack that extorted from organizations millions of dollars in bitcoins used ShapeShift to convert the ill-gotten BTCs into Monero. After such conversions, the XMR tokens made it virtually impossible to continue tracking the funds because of Monero’s robust privacy features, WSJ’s researchers found.

“The Journal found that ShapeShift processed nearly $9 million of the suspect funds, more than any other exchange with U.S. offices.” Moreover, $6.3 million in apparent illicit funds flowed into U.S.-based Bittrex.

Erik Voorhees bristled at WSJ’s piece because of the tiny crypto amounts involved compared to massive funds laundered by traditional banks. He tweeted on Friday, “We are aware of the poorly-researched piece written against us by someone at WSJ. The implications are disingenuous and misleading.”

Twitter: Erik Voorhees

According to United Nations Office on Drugs and Crime, the “estimated amount of money laundered globally in one year is 2 – 5% of global GDP, or $800 billion – $2 trillion in current US dollars. Though the margin between those figures is huge, even the lower estimate underlines the seriousness of the problem governments have pledged to address.”

New crypto regulations in the U.S. and elsewhere could impose the three “Fs” the U.N. refers to as finding, freezing and forfeiting dirty money. But these efforts are likely to be hampered by modern tech’s ability to keep transactions anonymous, as is the case with Monero coins.

Voorhees may have a point when it comes to the big picture.

Credit: Danske Bank investigation

Earlier this month, European banking giant Danske Bank announced that its Estonian branch had laundered up to $234 billion (which is the size of the Danish economy) from 2007 to 2015. A total of 6,200 customers, most of whom are non-residents of Denmark, were deemed suspicious according to an internal investigation and routinely laundered funds with the help of Danske employees.

“Over the nine years from 2007 through 2015, the flow converted into EUR for both the approximately 10,000 customers in the Non-Resident Portfolio and the 15,000 customers subject to investigation was approximately EUR 200 billion,” according to Sept. 2018 Danske Bank report. “Most used currencies were USD and EUR (for purposes of analysis, all payments have been converted into EUR using historical exchange rates).”

Much of the laundered funds involved ties to Russia, eastern Europe and China.

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