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Criminals will find it harder to hide illicit Crypto Payments thanks to DOJ and Blockchain Analytics

By Avivah Litan | October 07, 2021 | 1 Comment

The DOJ announcement on the National Cryptocurrency Enforcement Team is a welcome event that will provide further consumer safety and legal clarity around a burgeoning cryptocurrency market.  See  DOJ to Launch National Crypto Enforcement Team: Report  This comes on top of other U.S. government efforts to curtail ransomware attacks that result in cryptocurrency ransom payments, and to sanction exchanges used by ransomware related criminals. (See Note 1 )

Cryptocurrency markets are growing quickly (see  Note 2) but crypto funds used by criminals still represent a small fraction of the circulating value. Cybercrimes involving cryptocurrencies totaled about $1.9 billion across the world in 2020 (Source: CipherTrace).

Still many users, investors and consumers view cryptocurrency networks as havens for criminals, as they do enable money laundering and anonymized payments to criminals for ransomware and other crimes.  Illicit activity is more common when criminals act as their own Crypto Custodian and do not use a VASP (Virtual Asset Service Provider). See Figure 1 below that analyzes illicit Bitcoin transactions per four different companies, published in this July 2021 FATF Report 

  • The DOJ Enforcement team should make cryptocurrency networks even safer than legacy payment networks.

    Transparent and immutable blockchain payments and fund transfers are much easier to trace than those on opaque legacy payment networks such as ACH where technically, records can be modified or deleted.

  • In fact, high profile crypto hacks in 2021 resulted in criminals returning stolen funds or law enforcement clawing them back. Investigators use advanced blockchain forensics to track stolen funds and identify blockchain addresses where funds are parked.
  • Once stolen funds are marked, they cannot be easily moved off the blockchain for subsequent use without being seized by watchful parties and law enforcers.

Examples in 2021:

    • In June 2021, U.S. law enforcement recovered $2.3 million, or almost half of nearly $5 million in bitcoin paid to a criminal gang that participated in the devastating ransomware attack on the Colonial Pipeline.
    • In August 2021, spokespersons for Poly Network, a DeFi platform, said hackers returned all but $33 million of the $600 million in stolen cryptocurrency, about two weeks after the hack

The DOJ Team will further strengthen the safety of transacting in cryptocurrencies and will keep the criminals off those networks. Law enforcement efforts layer on top of the increased sophistication and use of blockchain-based analytics from companies like Chainalysis, Ciphertrace and Valid Network. Criminals will find it extremely difficult to get stolen money off crypto networks without getting arrested and thrown in jail.

Bottom Line:

Blockchain based payment networks are potentially much safer and already more transparent than the spaghetti code of payment networks we use today.  Law enforcement and smart regulations help ensure a safe and sound cryptocurrency network future.

1/ U.S. Treasury’s Office of Foreign Assets Control’s (OFAC) announced September 21 that it was sanctioning Russia-based cryptocurrency exchange Suex for its role in facilitating “transactions involving illicit proceeds from at least eight ransomware variants.”

/2 Cryptocurrency growth

  • Cryptocurrencies represent just under 11% of the $14.9 trillion US dollars in circulation but are growing quickly. Mainstream corporations, investors and financial institutions are increasingly buying in. As of September 2021, cryptocurrencies were worth about $2.1 trillion, doubling their value YTD, with bitcoin worth nearly $900 billion.
  • Assets committed (or locked) in decentralized finance (DeFi) protocols grew over 300% in the year prior to Sept 26, 2021 to about $82.6 billion. Still they are a tiny fraction of the world’s financial assets of some $316 Trillion, with lots of opportunities for expansive growth.
  • Circulating Stablecoins have more than quintupled from $20 billion to $110 billion in the past year as they are stable in value, and support more transparent and efficient value transfers than legacy payment networks do.
  • Major legacy payment network players are now supporting cryptocurrencies, including stablecoins to avoid disintermediation by newer crypto payment networks.




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  • Blockchain based payment networks are potentially much safer and already more transparent than the spaghetti code of payment networks we use today.