Markets
Cryptocurrency Markets Entangled With $100 Billion in Illicit Funds Since 2019: Report
Recent data from an on-chain analytics firm Chain analysis discovered that nine figures are worth of illicit funds have found their way into the digital asset space.
What happened:Nearly $100 billion in illegal funds have circulated through the cryptocurrency market since 2019, according to Bloombergciting a study by Chainalysis. This includes significant use of stablecoins and centralized exchanges. The former is increasingly used by bad actors and now accounts for the majority of illicit transaction volumes in the crypto space. More than half of these questionable funds end up on centralized exchanges, the study found.
Global authorities are tightening regulations on stablecoins and digital asset platforms to combat crimes such as money laundering and terrorist financing. However, 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 cash reserves and securities. Centralized exchanges manage customers’ assets, while decentralized alternatives allow users to control their tokens. These elements are crucial to the digital asset market.
Prosecutors are targeting the cryptocurrency industry because of these illicit flows. Binancethe largest centralized exchange, is now under US supervision after a $4.3 billion fine for sanctions violations and anti-money laundering.
Illegal funds from darknet markets, scams, ransomware and other sources are mainly concentrated on five centralized exchanges, according to Chainalysis. Criminals also use decentralized financial services, gambling sites, crypto mixers and blockchain bridges to launder money.
The market value of stablecoins has risen to over $160 billion from around $29 billion at the start of 2021, with Tether Holdings Ltd.USDT/USD dominating at 69%, followed by Círculo Internet Financial Ltda.USDC/USD up 21%, according to data from DeFiLlama.
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Why does this matter?:The revelation of $100 billion in illicit cryptocurrency flows highlights the ongoing fight against criminals in the digital asset space.
Last month, the United Kingdom Financial Conduct Authority (FCA) arrested two individuals involved in an unregistered cryptocurrency exchange worth over $1.2 billion. Elsewhere, the infamous case of Ruja Ignatovathe so-called “Crypto Queen” behind the OneCoin scam, shows the deep connections between cryptocurrency fraud and organized crime.
It remains to be seen whether regulation, such as the pending one, FIT21 “crypto bill” are equipped to deal with these problems.
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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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