General

The rise of decentralized finance (DeFi) has revolutionized how we interact with cryptocurrencies. However, alongside innovation comes the challenge of mitigating illicit activity. Coin swapping, a core function within DeFi, has emerged as a tool for money laundering, raising concerns about the potential misuse of these platforms. In this blog we’ll review how coin swapping on decentralized exchanges (or DEXs) works and why criminals exploit them to launder stolen funds. We'll also explore real-world examples of hacks where coin swapping played a major role in laundering stolen crypto across blockchains.

Introduction 

Stablecoins are cryptocurrencies designed to maintain a stable value by being pegged to a fiat currency or other assets. Their core advantage is the price stability that facilitates transactions and participation in decentralized finance. However, their main disadvantages include potential regulatory risks, as increased scrutiny and evolving regulations could impact their usage and acceptance, as well as centralization and transparency issues that pose significant compliance challenges.

Navigating the complexities of Anti-Money Laundering (AML) compliance within cryptocurrency requires a robust understanding of regulatory frameworks. Even more importantly, businesses must have access to an effective AML compliance solution to maintain strong government relations, enhance user trust, and streamline business operations.

Introduction:

The rise of crypto bridges has opened up new avenues for financial transactions. However, with this innovation comes the dark side of money laundering, posing a significant challenge for law enforcement agencies and regulators. In this blog, we delve into the world of crypto bridges, exploring the insidious trends of money laundering and providing a detailed analysis of yearly data up to 2023.

On November 14, 2023, the Securities and Exchange Commission released its 2023 Enforcement Report, which details enforcement actions that advance its mandate of protecting investors and maintaining fair markets. 

On 18th October 2023, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that it has imposed sanctions on ten Hamas members, operatives, and financial facilitators, including a Gaza-based money services business (MSB), Buy Cash Money and Money Transfer Company. Additionally, a terrorist-linked Bitcoin address was also sanctioned (19D1iGzDr7FyAdiy3ZZdxMd6ttHj1kj6WW) thathas received a total of $288,380,277 so far. 

On October 17, 2023, Binance blocked 100 accounts linked to Hamas, the terrorist group that launched a surprise attack on Israel. This action comes on the heels of blocking 190 accounts also linked to Hamas just one week earlier. These actions rightfully drew concern from the media and public: To what extent are terrorist groups in general and Hamas in particular transacting with cryptocurrency? 

The Office of Foreign Assets Control (OFAC) has once again taken rigorous steps to combat drug trafficking fueled by virtual currencies. In a recent enforcement action, OFAC imposed sanctions on 28 individuals and entities implicated in the global proliferation of illegal narcotics. Notably, among these targets is a China-based network responsible for the large-scale production and distribution of substantial quantities of fentanyl, methamphetamine, and MDMA precursors. Moreover, they also added 17 virtual currency addresses to its Specially Designated Nationals List (SDN).

When it comes to freezing illicit funds related to crypto-related crime, authorities in the United Kingdom (UK) have their hands tied. To perform this action, the suspects must already be in custody, or already convicted of a crime. 

In 2022, victims of cryptocurrency hacks collectively lost over $3.9 billion. Compared to other crimes, such as vehicle theft, most victims of cryptocurrency schemes will never recover their assets again.