How criminals cover their tracks with cryptocurrencies

Look for the money rather than the woman. To paraphrase Alexandre Dumas, who got one of the characters in his novel “Les Mohicans de Paris” to say that these ladies were at the center of police business, crypto-activation is a clue. crucial element of the investigation about ransomware.

For criminals, it is indeed a practical solution to quickly transfer large sums of money. In 2021, suspicious transactions are estimated at around $ 14 billion, which, however, is a tiny (0.15%) share of this type of exchange.

If the cryptocurrency is so crucial in the surveys, it’s thanks to the traceability that the large public registers of blockchains allow. Far from being anonymous, the use of digital assets takes place under the sign of pseudonymity. A trail too fresh that the Mafia franchises are trying to cover up. Thus, according to the latest report from blockchain research firm Chainalysis, the use of mixers has increased in 2021.

This type of blurring service, intended to break the traceability of cryptocurrencies by mixing different transactions in a common pot, is not new. But it has been the subject of a noticeable appetite from malicious actors affiliated with North Korea. According to the company, more than 65% of the funds they stole were laundered in mixers, compared to 42% in 2020 and 21% in 2019.

lots of problem

” [Les criminels] requires the participation of many users who enter comparable amounts to achieve the desired blur. »

Kimberly GrauerResearch leader, chain analysis

However, this passage is seen as increasingly dangerous, especially when criminals try to move large amounts of assets. The latter “requires the participation of many users who enter comparable amounts to achieve the desired blur,” recalls Kimberly Grauer, research director for Chainalysis. In other words, a criminal who brings a large amount of dirty money into a mixer would end up exchanging his assets from his left hand to his right hand, reducing interest in the maneuver.

This growing use of mixers is also observed by the French cybergendarmes from the Center for Fight against Digital Crimes (C3N). However, it can be added to other layers of bleaching, according to Captain Paul-Alexandre Gillot. The head of research for this device mentions, for example, the subsequent use of a swapper, these exchanges dedicated to converting one cryptoactive to another. This can create new problems with the traceability of financial flows. While some conversion services respond to legal requisitions, others do not actually record information about their users.

A problem already known with traditional crypto exchanges. If the majority of them got into the nails as Binance, which has just been registered in France as a provider of digital assets with the Autorité des marchés financiers , there are also “platforms with almost no legal existence hosted on serviced servers” in Eastern Europe, notes Paul-Alexandre Gillot. So many black boxes.

No mass migration to privacy coins

As for cryptocurrencies that specialize in protecting the anonymity of their users, such as Monero, they are struggling to establish themselves. However, it is not due to lack of trial, on the part of some cybercriminals. Revil began requesting payments in Monero during 2020 and only accepted bitcoin with a 10% increase in the amount requested. The same for Darkside, which asked 20% more for a payment in bitcoin. At Blackmatter, it was even 25%! Prometheus has only ever accepted Monero.

But these “privacy coins” have one big flaw: they are “not as liquid as bitcoin and other cryptocurrencies,” notes Kimberly Grauer. Under pressure from the regulator, trading platforms have withdrawn some of these digital assets from their markets, such as Kraken in the UK. And in general, with lower trading volumes, these cryptocurrencies are not well suited for transactions involving large amounts that are potentially less discreet.

Instead of using a single crypto asset, C3N investigators also note the use of very many tokens – it is estimated that there are more than 17,000 different crypto assets. Thus, during a recent seizure a few months ago, the gendarmes got their hands on the equivalent of three million euros spread over about forty crypto assets. Far from the classic use case, limited to bitcoin only, in the first lawsuits.

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