Cryptocurrency research group CipherTrace conducted an analysis of 45 million transactions from the top 20 cryptocurrency exchanges in the world to find out the the prevalence of Bitcoin’s use for criminal purposes.
The research called Cryptocurrency Anti-Money Laundering Report of Q3 2018 gathered data that spans from January 2009 to September 2018. It indicates that 97 percent of the Bitcoin laundered through top exchanges ends up in countries with tolerant Anti-Money-Laundering (AML) regulations.
That is $2.5 billion worth of dirty Bitcoins (380,000 BTC).
CipherTrace deemed transactions to be of criminal nature if they came directly from, or with close connection to, sources such as “dark market sites, extortion, malware, mixer/tumbler/money laundering, ransomware, and terrorist financing services.”
The research also concluded that countries where there is little-to-no AML regulations receive 36 times more Bitcoin from sketchy individuals or groups.
CipherTrace also notes governments can curb Bitcoin-related money laundering by enacting and enforcing more cryptocurrency AML regulations.
"This extensive analysis shows that criminal transactions are reduced in the presence of strong AML regulation—with the obvious benefit of reducing illegal and illicit activity in general. Since criminals use the funds to finance illicit activity—such as international drug gangs that use the laundered funds to produce and distribute more illegal substances—the benefits of wellenforced AML regimes to society are obvious."
The report also noted that in the first three quarters of 2018, hackers have stolen at least $927 million worth of cryptocurrency - with $166 million taken in the past three months alone.
"This represents 3.5 times as much cryptocurrency as was stolen in all of 2017," said CipherTrace. "Criminals will need to quickly launder these stolen tokens before stronger cryptocurrency anti-money laundering controls are deployed globally over the next 18 months."
Theft of cryptocurrencies at exchange and platform layers continued to represent a major problem in the third quarter of 2018, albeit in a slightly evolved form. The most notable were the $530 million worth of tokens stolen in Japan from Coincheck and $195 million worth of tokens stolen from BitGrail.
These happened because of new and effective cryptocurrency crime threats. This includes, and not limited to: highly targeted mass cyber extortions, SIM swapping, and advanced cyberattacks.
CipherTrace declares if this trend continues, hackers will have stolen at least $1 billion in cryptocurrency by the end of the year.