One of the most evolving technologies, blockchain-backed cryptocurrencies, is anticipated to replace the traditional banking transferring system. However, Bitcoin (BTC) and crypto scams are no less a big threat.
Recently, a report published by Elliptic unearthed that Bitcoin was utilized in crime proceeds through privacy wallets. Criminals are using privacy wallets to get rid of tracking and hide their illegal bitcoin transactions.
The money laundering crimes involving bitcoin have risen from just 2% in 2019 to 13% in 2020 so far. The use of privacy wallets for illicit purposes has rocketed since 2019, and cryptocurrencies remain favorites for thieves to make megabucks.
Privacy wallets and Bitcoin on the radar of money launderers
The U.K.-based analytics firm Elliptic in its new guide, “Financial Crime Typologies in Cryptoassets,” noted that over 35 financial crime typologies use cryptocurrencies, including Bitcoin.
The report highlights how alarmingly privacy wallets are being used in crypto laundering activities.
Wallets like Wasabi Wallet have tools that muddle user identity. For instance, the automatic peer matching and process of CoinJoin transactions uses Bitcoin as one of the transactions.
The blockchain analytics tool can track transactions that occur on the blockchain using bitcoin. So, it’s challenging to launder using Bitcoin only. What bad actors do is that they use mixers to overcome this hurdle.
Attackers can secure their identity using mixers that allow them to deposit BTC and then withdraw different BTC from the pool. It split outs the blockchain trail, hiding the identity of the breaching party.
According to Elliptic, Bitcoins sent through mixers total a whopping $2 billion to date. Mixers are a massive business as the operator charges 0.5% to 5% transaction fee.
After the regulatory authorities started to break down the mixers’ code, culprits have turned to privacy wallets. The most suitable option for them is to use bitcoin wallets owned by certain individuals.
Regulators took down Helix, one of the largest mixers, and fined almost $60 million for breaching anti-money laundering law.
The crime rate has increased, shifting from mixers to private wallets, over the last couple of years. Approximately 13% of the criminal transactions in BTC got carried out in 2020. This reflects over $160 million in Bitcoin from thefts, darknet markets, and money laundering scams via privacy wallets.
Twitter hack remains one of the prominent hacking events of 2020, raising over $120K, most of which was laundered using Wasabi Wallet. A similar incident happened in September when $280 million worth of crypto was stolen from the KuCoin exchange.
What’s the PayPal-crypto deal?
After long anticipation, PayPal has finally decided to accept cryptocurrency. According to certain sources, the payment giant is ready to allow the direct purchase of cryptocurrencies on its platform.
It’s no secret that PayPal has had its concerns regarding Bitcoin in the past. Where the adoption of cryptocurrency is a significant step forward, the company executives have always had ambiguity regarding cryptos.
The founding CEO of PayPal, Bill Harris, has been censorious of digital tokens. Back in 2018, he named bitcoin to be one of the greatest scams ever. For him, bitcoin and digital tokens were nothing more than straw assets.
It seems his beliefs regarding Bitcoin were severely impacted due to its use in criminal activities. Harris pointed towards the use of BTCs in the Silk Road and the increasing crypto-jacking.
Fast forward to late 2020, the platform of over 325 million users is now ready to accept cryptocurrencies.
Initially, crypto trading will be done directly from both PayPal and Venmo. The company will also add a built-in wallet to store tokens.
In essence, with years, things have changed, and PayPal now seems to have a more open stance regarding the crypto sphere. Crypto has its drawbacks, but the future lies in the new technology.
In the coming days, PayPal might officially announce further adoption of cryptocurrencies. However, threats and scams from Bitcoin are still a big hurdle.
