A report compiled by the leading cryptocurrency intelligence firm, CipherTrace, gives details about the current state of major crypto-based criminal activity. Main highlights of this report include the increase in cross-border crypto payments, Iran’s growing interest in cryptocurrency as a means to sidestep sanctions, and the $356 million in cryptocurrency thefts in that quarter alone. These findings are an attempt to discover common trends in order to assist in developing future legislation against such corruptions.
CipherTrace is a well-known and highly-developed intelligence operation that works to build solutions for monitoring and regulating crypto-based fraud. CipherTrace is often used by leading exchanges, banks, investigators, regulators, and digital asset businesses in order to trace transactions and display compliance with current anti-money laundering regulations in hopes of building trust in the cryptocurrency economy. Their quarterly reports have become a vital data resource when it comes to monitoring and the legislation of crypto transitions.
CipherTrace’s report for this quarter shows a concerning trend involving cross-border crypto payments becoming untraceable as they leave U.S. exchanges after entering offshore locations. In twelve months the crypto transfers from the U.S. exchange to offshore exchanges grew 21 points or 46 percent when compared to the same period from two years before. These transactions fall out of U.S. awareness as they leave the exchange, making them blind spots that are highly difficult to monitor or regulate.
There is also mention of the Bitfinex/Tether situation within the report. This recent case involved an alleged fraud discovered by the New York State Attorney General’s Office. The case is still under scrutiny, but there was a major loss of $850 million and a discovery by CipherTrace that the source of the loss was a Panamanian payment processor, Crypto Capital, which was extensively utilized by QuadrigaCX.
The report also details the attempt by some countries to utilize cryptocurrency as a means to avoid global monetary sanctions. One main culprit of this type of manipulation is Iran. In 2018, SWIFT, the Society for Worldwide Interbank Financial Telecommunication, did attempt to prevent this by banning a number of Iranian banks from accessing their cross-border payment services. However, Iran has recently launched its own sovereign cryptocurrency.
In the Q1 2019 report, more than $356 million has been taken due to exchange thefts and exit scams. Many professionals are stating that if this trend is able to continue at this rate, it could easily near the billion mark by years end.
While all of the news in the report is unsettling, many are attempting to seek the positives from the negatives. This report can be utilized as a wakeup call for many who were hesitant about pushing for hard-handed regulations, excessive monitoring, and strict enforcement. With new forms of criminal activity on the rise, newer regulations and monitoring techniques may be necessary for the near future.
“Although this report punctuates some of the negative occurrences within the crypto ecosystem, it is important to view these illuminations as markers for improvement,” said Dave Jevans, CipherTrace CEO. “This is the wake-up call crypto needs. Cryptocurrency is maturing, and that means having a few growing pains. Once we identify problems, we can find solutions. Cryptocurrency projects must grow up before they can move forward.”, he added.
Those who are interested in learning more information about cases like this, or who want to keep up-to-date on the latest legal proceedings, check out the Jeffrey Newman Law Whistleblower Help Center and blog!