The firm’s 2020 “State of Crypto Crime” report, published Wednesday, offers analysis of illicit activities last year, contrasting 2019’s actions with previous years. Chainalysis found that while the amount of bitcoin sent from criminal entities doubled between 2018 and the end of 2019, it still accounts for just 0.08 percent of the total number of bitcoin transactions last year.
Greater regulations and enforcement can deter some crypto crimes, blockchain forensics provider Chainalysis said in a new report.
And while exchange hacks and thefts dominated headlines last year, “scams were by far the highest-earning category of crypto crime in 2019”, the report said. “Cryptocurrency scams represent a significant danger to consumer protection, and the growth of this activity in 2019 calls for increased action from regulators, law enforcement and exchanges alike.”
According to the report, scammers received roughly $4.3 billion in crypto, out of about $6 billion received from illicit activity last year. Overall, scams accounted for $8.6 billion in crypto transactions, while criminal activity (including hacks and thefts) totaled just under $12.5 billion..
Other categories included terrorism financing, ransomware, darknet markets, outright theft, sanctions and child abuse. Moreover, the total amount of crypto used in scams is disproportionately weighed down by “just three separate large-scale Ponzi schemes”; without them, the numbers drop dramatically (for example, the PlusToken Ponzi appears to have accounted for between $2 and $3 million alone).
Chainalysis mentions at multiple points that a solution, or at least the beginnings of one, to the issue of illicit activity can come from more informed regulation, better enforcement of regulation and action by crypto exchanges to tackle illicit activities.
“We believe the consumer protection implications make cryptocurrency scams an issue regulators must address and law enforcement must have the resources to investigate”, the report said. “Exchanges are also in a unique position to help, both in terms of protecting users from being scammed and preventing successful scammers from depositing funds or cashing out.”
Regulators and law enforcement agents must become more familiar with analyzing blockchains as part of this effort, the report said.
The company also highlights its own services, noting that while money laundering in the fiat world might require court-issued subpoenas to tackle, “blockchain analysis tools like Chainalysis” can help investigators analyze transactions recorded on public ledgers.
Binance CEO Says Crypto Exchange Has Applied for a Singapore License
According to a report from Bloomberg on Sunday, the firm’s CEO and co-founder Changpeng “CZ” Zhao said in an interview that an application has already been submitted to the island state’s authorities under new legislation passed in late January.
“We submitted the application pretty fast. Binance’s Singapore entity has been in close touch with the local regulators, and they have always been open-minded”, CZ told Bloomberg.
The updated Payments Services Act brings what are termed digital payment token (DPT) services – covering all crypto-based businesses and exchanges plying their trade in Singapore – under current anti-money laundering (AML) and counterterrorist-financing (CTF) rules.
Under the act, crypto firms are required to first register and then apply for a license to operate in the jurisdiction.
Binance already has an office in Singapore, Bloomberg indicates.
As of Jan. 28, 2020, the payments act gave existing crypto firms a month to register with the Monetary Authority of Singapore. Once firms are registered, they are given a six-month period in which they must apply for their payment institution license.
Binance, once a purely crypto-to-crypto exchange, has been working to expand its user base in recent months with the addition of fiat payment gateways. Last week it added 15 cryptocurrencies through Israeli payment processor Simplex. It’s also just hired a former Uber exec to help drive global growth.
While Singapore’s new regime means crypto firms will have to run their operations to a high regulatory standard, it also brings them legitimacy and an official licensed status. Independent Reserve, one of the largest cryptocurrency exchanges in Australia, said last month that it would expand to Singapore citing “a number of positive moves by Singaporean regulators.”
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