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The US this week dealt a blow to cryptocurrency launderers on the darknet.
On April 28, the US Department of Justice (DoJ) announced the arrest of Roman Sterlingov, who operated the Bitcoin Fog mixing service. The Department of Justice alleges that Bitcoin Fog has facilitated illegal bitcoin transactions to darknet market sellers totaling more than $335 million since 2011. In addition to money laundering charges, Sterling faces charges of operating an unlicensed money business.
This is the second major action taken by the US authorities against the illegal mixing service. Last year, the DoJ filed similar charges against the operator of the mixing service Helix, which was also received a fine of 60 million dollars by the US Financial Crimes Enforcement Network (FinCEN) for non-compliance with anti-money laundering (AML) requirements.
At Elliptic we were focused on highlighting the risks of money laundering around the mixer for several years. Our research suggests that more recently criminals have begun to reduce their reliance on mixers and instead switched to using private walletssuch as Wasabi Wallet, as a favorite way to launder bitcoins.
These anonymizing technologies can help criminals launder money, but as we’ve always emphasized, regulated businesses are not helpless when it comes to identifying risky transactions involving mixers and privacy wallets.
While mixers and privacy wallets hinder the ability to track funds end-to-end, blockchain analytics allow crypto exchanges and other regulated businesses to see if their clients’ funds are being sent or received from mixers and privacy wallets. Regulated firms can then use that information to conduct enhanced due diligence, report suspicious activity, or take other action against high-risk orders.
Law enforcement can also take advantage of this capability. By removing the Bitcoin Fog, US authorities were able to analyze more than 10 years worth of transactions on the blockchain to build their case. Ability blockchain analytics The disclosure of the use of mixer and privacy wallets was also on full display during last year’s Twitter hack when Elliptic was able to identify how the cybercriminals behind the attacks used mixing services and private wallets to launder the funds. The perpetrators of that hack were arrested shortly after, despite attempts to hide the stolen cryptocurrency.
Contact us to learn more about how we can help your crypto business identify the risks associated with mixers and privacy wallets for AML compliance.
🇮🇷 Iran is trying to defy sanctions by mining Bitcoin
Central Bank of Iran published this week that it will allow private citizens and companies to buy imports with cryptocurrencies. The catch: the crypto must come from government approved miners. Read our sanctions guide for tips on how you can use blockchain analytics to detect sanctions risk in crypto transactions involving countries like Iran.
🇰🇷 South Korea sends a stern warning to crypto exchanges
This week the chairman of South Korea’s Financial Services Commission (FSC) calls to crypto exchanges to expedite their applications for regulatory permits or face the risk of closure. Eun Sung-ooo said that the FSC has not yet received any licensing applications from the more than 200 crypto exchanges in Korea and warned that the FSC will not hesitate to shut down those that do not apply by September.
🇹🇼 Taiwan is getting ready to launch crypto regulation
As of July 1st, all crypto exchanges in Taiwan will have to comply with AML requirements. Taiwan is home Elliptical partner of CoolbitXwhose Sygna Bridge the platform helps cryptocurrency exchanges throughout the Asia-Pacific region to comply Travel rule.
💵 APAC countries are looking to tax crypto transactions
Keeping up with the developments in APAC, countries across the region have indicated that they will place an increasing focus on taxing crypto activities. Financial supervisors in South Korea and Indonesia talked this week about plans to tax cryptocurrency trading profits – part a a global effort by tax authorities to generate income from crypto activities and combat tax evaders on cryptocurrencies.
Missed our last week’s update? See here: Crypto industry responds to FATF consultation
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