![]() ![]() The yellow segment represents the non-criminal funds received by the accounts in each bucket.The red segment of the bars represents the amount of illicit Bitcoin received by all accounts in each bucket.That means, for example, that the 31 accounts in the highest-earning bucket on the right-hand side have collectively received just over $8 billion worth of Bitcoin in 2019, and that each of those 31 accounts individually has received between $100 million and $1 billion worth. The yellow and red stacked bars show the total amount of cryptocurrency received collectively by all the accounts in each bucket.All accounts shown have received at least some criminal funds. Again, the buckets are based on the total amount of Bitcoin the accounts have received individually, from both criminal and non-criminal sources. The green bars represent the number of unique accounts in each bucket.Total Bitcoin received by accounts on Huobi and Binance with illicit exposure in 2019 Who’s behind those accounts? Are any of them significant traders? Below, we’ve broken those accounts down into buckets based on the total value of all Bitcoin they’ve received in 2019, with illicit Bitcoin called out (please note that due to the nature of how we connect illicit funds to specific addresses, this chart considers only $1.1 billion of the total $1.4 billion worth of illicit Bitcoin received by Binance and Huobi). Overall, just over 300,000 individual accounts at Binance and Huobi received Bitcoin from criminal sources in 2019. How can they be receiving so much Bitcoin from criminal sources? Let’s start by looking at the specific accounts receiving illicit funds at both exchanges. ![]() That may come as a surprise given that Binance and Huobi are two of the largest exchanges operating, and are subject to KYC regulations. Exchanges receiving illicit Bitcoin in 2019īinance and Huobi lead all cryptocurrency exchanges in illicit Bitcoin received by a significant margin. Just over 50% went to the top two: Binance and Huobi. Over the course of the entire year, we traced $2.8 billion in Bitcoin that moved from criminal entities to exchanges. While exchanges have always been a popular off-ramp for illicit cryptocurrency, they’ve taken in a steadily growing share since the beginning of 2019. Illicit services include ransomware addresses, sanctioned entities, darknet markets, and addresses associated with scams and stolen funds. Please note: Risky services include P2P exchanges, mixing services, high risk exchanges, and gambling sites. Types of services receiving illicit Bitcoin, 2016 – 2019 Let’s start by examining the most common destinations of illicit funds over time. Thanks to the inherent transparency of blockchains, we can look at the cryptocurrency laundering ecosystem from a high level, drawing insights that are impossible to identify from analyses of traditional finance. Mapping the cryptocurrency laundering ecosystem When token swapping, criminals use decentralized (crypto-to-crypto) exchanges to trade less liquid cryptocurrencies for ones that more exchanges accept, like Bitcoin and Ether. When mixing, criminals insert their cryptocurrency into software tools that pool and scramble cryptocurrencies from thousands of addresses. Mixing and token swapping are also increasingly common stages in the laundering process. In most cases, cryptocurrency laundering entails either a) sending cryptocurrency to a high-risk or unregulated crypto-to-fiat exchange, or b) using fraudulent or stolen identity documents to do the same at a regulated exchange. In doing so, criminals convert the ill-gotten cryptocurrency into fiat money, where it is then spent on goods and services and integrated into the economy. But first, some definitions: What is Crypto Money Laundering?Ĭryptocurrency money laundering is the act of making cryptocurrency obtained through criminal activities appear legitimate. In this article, we analyze the main players in the ecosystem. The network of exchanges that facilitate this laundering-whether intentionally or unwittingly-is substantial, and growing. Since 2016, criminals have laundered $33 billion worth of ill-gotten cryptocurrency. ![]()
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