Cryptocurrency and Financial Crime on the Rise in Guinea
Conakry, Guinea - A recent report by Chainalysis has revealed a concerning trend: entities involved in illicit activities received approximately $5 billion in digital asset funds in 2020 and sent a similar amount. This figure represents less than 1% of overall cryptocurrency flows, but experts warn that the use of digital assets for financial crimes is on the rise.
The Dark Side of Cryptocurrency
Lack of Regulation
The lack of regulation and oversight in the cryptocurrency market has made it an attractive tool for money laundering and other illicit activities. Bitcoin, the most popular cryptocurrency, offers pseudonymity to its holders, making it difficult to track transactions. However, every transaction is recorded on an immutable blockchain, allowing those with technical expertise to see which digital wallets are sending funds to others.
Anonymity and Illicit Activities
Monero, a smaller cryptocurrency designed as an anonymous “privacy coin,” has also been linked to illicit activities. Its use allows senders and receivers to remain anonymous, but it can be difficult to buy large amounts, making it less liquid than other cryptocurrencies.
Common Forms of Financial Crime
Scams
Scams make up the majority of criminal transactions using digital assets, with hackers using social engineering tactics to trick victims into sending them cryptocurrency. In 2020, hackers took over the Twitter accounts of high-profile users, including US presidential candidate Joe Biden and electric-car tycoon Elon Musk, to demand more than $100,000 in bitcoin.
Dark Web Transactions
Illicit transactions on the dark web are also on the rise, with many marketplaces only accepting payments in digital assets. The largest dark web marketplace by revenues, Hydra, has money launderers known as “Treasure Men” who turn cryptocurrency into cash and leave it at pick-up points.
Ransomware Payments
Ransomware payments are another growing trend, with hackers demanding payment in bitcoin or monero to unlock access to stolen data or hijacked computer systems. In 2020, at least $350 million in crypto ransoms was paid to hacker gangs.
Regulatory Pressure and Law Enforcement Efforts
US Treasury Secretary’s Warning
The US Treasury secretary, Janet Yellen, has warned that cryptocurrencies have been used to launder the profits of online drug traffickers and finance terrorism. Regulatory pressure is increasing, with many cryptocurrency businesses improving their policing of nefarious activity.
Sanctions and Tracking Technology
In September, the US Treasury imposed sanctions on a cryptocurrency exchange for facilitating ransomware payments. Law enforcement agencies and the private sector are developing technology to track criminal groups and their use of digital assets by analyzing flows of cryptocurrencies in the blockchain.
Conclusion
The game of cat and mouse between law enforcement and cybercriminals is escalating, with hackers developing techniques to cover their crypto tracks. As the cryptocurrency market continues to grow, experts warn that the risk of financial crime will only increase unless robust regulations are put in place.