Elliptic Report reveals growing usage of privacy wallets for Bitcoin Money Laundering

The report by Elliptic states that crypto scammers now use privacy wallets for their Bitcoin money laundering activities.

By · Dec 14, 2020 . 7min read

Bitcoin Money Laundering latest news

According to a recent report by Elliptic, a blockchain analytics firm, more than 13% of all funds in bitcoin looted from criminal activity are being laundered via privacy wallets. The report, called “Financial Crime Typologies in Cryptoassets,” studies over 35 “financial crime typologies” that include the application of cryptocurrencies. It incorporates the growing usage of mixers for laundering digital assets. It states that scammers use privacy wallets for bitcoin money laundering activities.

Elliptic in its recent report declared that money laundering activities involving bitcoin are increasing. It states that the normal method of operation for carrying out laundering activities has also changed. The report noted that the former method was application of Bitcoin mixers which has phased out for privacy wallets.

Intricate details about Bitcoin Mixers

Bitcoin Mixers are coin randomizers. They normally ensure that the value of Bitcoin transacted between a sender and receiver differs significantly. At the conclusion of such transactions, the mixers then make tracing the transaction back to the wallet remarkably challenging. Nevertheless, mixers face numerous problems and an increasing number of regulators have been capable of decreasing their influence.

Notwithstanding, these services have been around for a while, they’ve lately grabbed the limelight for the involvement in recent high-profile crimes. It involves a $4.2 billion PlusToken Ponzi scheme and the $280 million KuCoin exchange hack. The crypto scammers have endeavored an option which is the application of privacy wallets. According to the report, CoinJoin transactions have offered a safer alternative. It enables processing funds from various users in a single transaction, instead of combining funds in a mixer managed by someone else.

Role of Privacy Wallets in Crypto Scams

The downside of this method, according to the Elliptic report, is that it can be hard to discover other parties taking part in these transactions. Privacy wallets such as Wasabi Wallet make things more comfortable by combining and carrying out CoinJoin transactions for users. In accordance with the reports, criminals have shifted from conventional mixers to privacy wallets across the past four years. It states that at least 13% of laundered funds in bitcoin are transferred via privacy wallets in 2020, progressing from mere 2% in 2019.

The crypto industry suffered various attacks this year. However, use of privacy wallets occurred in famous crypto frauds perpetrated with Bitcoin. The report stated the usage of privacy wallets in the popular Twitter hack. The Twitter accounts with huge followings received requests to make donations into a particular Bitcoin wallet. The other use of the wallet was through the attack on KuCoin. In this attack, the hackers stole over $200 million worth of Bitcoin.

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