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Laundering Money! Cryptocurrency Exchanges were used since years

Over 46 #cryptocurrency exchanges around the globe assisted criminals in laundering more than $88 #million over the past two years, a #WallStreet #Journal report alleges.

Money #Laundering Pervasive in #Crypto Trading Industry: Report

The Journal’s investigation traced funds from over 2,500 #wallets that courts flagged for their involvement in #criminal activities. The paper partnered with London-based #blockchain #forensic company Elliptic to trace funds from wallets to exchanges. Also, to identify #intermediary portfolios, which could have belonged to crypto #exchanges, the Journal downloaded and compared them to the wallet #addresses of suspected exchanges.

#ShapeShift AG, the report #alleged, was one of the largest #recipients of illicit funds to have offices in the U.S., processing over $9 million out of the suspected $88 million over a two-year period. The #Switzerland-incorporated-but-U.S.-operated altcoin exchange service lets people trade bitcoins and other digital #currencies #anonymously. Recently, though, ShapeShift announced that it would oblige with #KYC standards from Oct. 1 to “de-risk” itself.

However, the Journal didn’t cut #ShapeShift any slack for this change of heart, indicting the exchange for facilitating tainted #transactions. Notably, the paper highlighted ShapeShift CEO Eric Voorhees‘ liberal take on #anonymity on many occasions — frequently citing his views against AML laws or laws that require #exchanges to perform KYC on every customer to catch an occasional criminal — to prove the exchange’s alleged unapologetic involvement in laundering #money.

Privacy-centric #cryptocurrency monero was often used to help mask transactions throughout the money #laundering process, the WSJ said.

The WSJ report also presented evidence from security #researchers, supposedly proving that criminals used ShapeShift to exchange #bitcoin for monero, an anonymity-centric cryptocurrency. Following the WannaCry ransomware attack, in which hackers from #South #Korea extorted millions of dollars from #governments and businesses, the investigation traced the extorted BTC to #ShapeShift. It went on to say that the exchange didn’t change its policy even one year after the attack, and continued to #launder criminal #funds that eventually became untraceable.

In another example, the Journal mentioned an #ICO that raised $2.2 million worth of #ethereum from investors and then went missing with the funds. Upon trailing the stolen money, the paper found that one part of the #cryptocurrency ended up at #Asian exchange #KuCoin, and about $517,00 went straight to #ShapeShift, where it was exchanged for monero.

“Even #spoofers who robbed ShapeShift’s own would-be customers by setting up a copycat #ShapeShift website that stole their money used the real ShapeShift to launder their funds,” the report’s #authors wrote, citing publicly-visible online data.

ShapeShift CEO Criticizes ‘#Misleading’ Report.

The Journal provided ShapeShift with all the suspected addresses and ShapeShift banned them from using the #exchange. Veronica McGregor, the chief legal advisor to ShapeShift, further commented that they are preparing to comply with the #existing AML and KYC regulations in the wake of future crypto regulations. She also #separated their CEO’s “#philosophy” from the way ShapeShift would or should govern, saying “he’s not pro-money #laundering.”

On his part, #Voorhees sharply criticized the #WSJ report, stating its facts are cherry-picked and that the reported tainted trades amount to only 0.2 percent of #ShapeShift’s overall volume.

“We are aware of the #poorly-#researched piece written against us by someone at WSJ. The #implications are disingenuous and misleading,” he wrote on Twitter. “Author cherry-picked data, excluding facts #contrary to vilification narrative. $9m figure is less than 0.2% of our volume over the time-period. Meanwhile #global money# laundering through banks is 2-5%.”

2/2 Author cherry-picked data, #excluding facts #contrary to #vilification narrative. $9m figure is less than 0.2% of our #volume over the time-period. Meanwhile global money #laundering through banks is 2-5%. Op-ed forthcoming.

— Erik Voorhees (@ErikVoorhees) September 28, 2018

Images from Shutterstock

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