Latest data from on-chain analytics companies Chainalysis Illegal funds worth nine-figure amounts have been found flowing into the digital asset sector.
what happenedCiting a Chainalysis study, Bloomberg reported that nearly $100 billion in illicit funds have circulated in the cryptocurrency market since 2019, including the significant use of stablecoins and centralized exchanges. Stablecoins are increasingly being used by bad actors and now account for the majority of illicit trading volume in the cryptocurrency industry. More than half of this suspicious money flows through centralized exchanges, according to the study.
Authorities around the world are tightening regulations on stablecoins and digital asset platforms to combat crimes such as money laundering and terrorist financing, but criminals continue to find ways to circumvent these rules. “The ecosystem is constantly changing,” he said. Kim GrauerDirector of Research at Chainalysis.
Stablecoins aim to maintain a stable value of $1 backed by a reserve of cash or bonds. Centralized exchanges custody their customers' assets, while decentralized exchanges give users control over their tokens. These factors are crucial for digital asset markets.
Prosecutors have targeted the cryptocurrency industry because of these illicit financial flows. BinanceBitcoin, the largest centralized exchange, is currently under US scrutiny after being hit with a $4.3 billion fine for violating anti-money laundering laws and sanctions.
Illegal funds from darknet markets, scams, ransomware, and other sources are primarily concentrated in five centralized exchanges, according to Chainalysis. Criminals also use decentralized finance services, gambling sites, cryptocurrency mixers, and blockchain bridges to launder money.
The market value of stablecoins has soared from around $29 billion at the start of 2021 to more than $160 billion. Tether Holdings Inc.of USDT/USD The overwhelming majority, at 69%, followed by Circle Internet Financial Co., Ltd.of USDC/USD According to DeFiLlama data, it's 21%.
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Why is this important?The revelation of $100 billion worth of illicit cryptocurrency leaks highlights the ongoing fight against bad actors in the digital asset space.
Last month, the UK Financial Conduct Authority (FCA) arrested two people connected to an unregistered cryptocurrency exchange valued at more than $1.2 billion, while the infamous case of Ruja Ignatova, the so-called “crypto queen” behind the OneCoin scam, shows the deep ties between crypto fraud and organized crime.
It remains to be seen whether regulations like the pending FIT21 “cryptocurrency bill” can address these issues.
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This content was produced in part with the help of AI tools and was reviewed and published by Benzinga editors.
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