Blockchain for Criminals: The Hard Fork to Peer-To-Peer Money Laundering

Welcome to money-laundering basics, a collection of tips, tricks, and guidelines, used by the world criminal masterminds to keep up to date with the latest anti-money laundering using cryptocurrency and blockchain platforms.

While I don’t advocate that you break the law, here is a rundown of how criminals are using blockchain technologies to evade law enforcement.

Since the start of the blockchain era, government agencies have ramped up their efforts to keep up with the latest on money laundering. In recent years, money launderers have invested in cryptocurrencies, with current estimates suggesting that criminal enterprises have employed hyper-connected networks to launder illegally earned funds amounting to well over $2.5 billion.

However, contrary to popular belief, bitcoin transactions can be traced back to the origin of the funds.

This fact should be obvious.

Bitcoin is built on a public ledger system, the blockchain, which is designed to be totally transparent and browsable by anyone in the network; including law enforcement agencies.

Disappointing isn’t it? You probably have read a stream of articles on mainstream media promoting bitcoin as a way to make anonymous transactions across the globe. In fact, there are barely any cryptocurrencies capable of facilitating completely anonymous transactions.

Despite this, dumb criminals still use bitcoin for illicit transactions.

So, how do you turn ill-gotten money into clean cryptocurrency? How do the top echelons of crime launder money through cryptocurrencies?

Here is how they do it…

Crime bosses use so-called bitcoin mixers, who specialize in split up bitcoin, purportedly to clean dirty cryptocurrency. The process to clean dirty bitcoin starts by bouncing the bitcoin among various bitcoin addresses. The mixer will then reimburse the full amount to a bitcoin wallet hosted on the dark web, ending the process.

First, bitcoin is transferred to a bitcoin wallet hosted on the Darknet. The mixer will automatically split the bitcoin, sending it to numerous dark-web-based addresses randomly, to prevent anyone from linking the transactions together. At this point, the bitcoin is purported to be clean and can be deposited on a cryptocurrency exchange.

As you can imagine, such kind of financial artistry doesn’t come cheap and is a little painstaking to use. However, if you have the funds, you will need one bitcoin wallet hosted on the standard internet, and two or more bitcoin wallets hosted on the dark web. When it comes to doing business in the dark web, it goes without saying, be careful.

Nothing is Free!

For a premium service, the fees would be between five to ten percent of the cryptocurrency to be mixed. Beware that law enforcement agencies are conducting studies on these mixing services to expose the security and privacy limitations of such services. This should remind you of the danger that criminals are still exposed to.

Alternatively, criminals may also choose to launder bitcoin through unregulated exchanges, where Anti-Money-Laundering laws are not enforced. Such exchanges can be used to clean dirty cryptocurrencies. However, how useful this model depends on the exchange’s monitoring technology.




Last modified: October 17, 2019