🇬🇧Crypto Intelligence: Crypto Crime Situation to the First Semester 2019 and Related
The crime situation in the first semester of 2019, in terms of crypto intelligence, highlights more interest in the ‘connected’ than the analysis of the usual data. Go in order.
Ciphertrace in his second quarterly report notes, as a quantitative component, such as the revenues of the crypto-crime for the current year will be 4.26 billion USD. The trend, which denotes progressive growth over the past years, develops through damage mainly to the operators through theft. The rubbies, which are mostly produced with cybercrime techniques, continue to hit the big players in the exchange sector for large numbers demonstrating, which has already been repeatedly stressed in these lines, that the sector is plagued by continuing and embarrassing corporate slovenliness.
The sector at the highest level is also troubled by an intrinsic propensity to the scam that does not depend on the people crime or criminal use of cryptocurrency : among the rest on April 25 the General Attorney’s Office in New York City prosecutes Bitfinex and Tether by accusing the second of covering 700 mil USD of loss of the first through the use of the stablecoin reserves of which it is holder.
An interesting highlight, especially for the Asian markets from which originates and where it is producing major trouble, are the Ponzi schemes linked to ICO. They are promised large returns to the token counter value in exchange for immediate purchases : then the organization disappears at the exit; attention. In the Ciphertrace report, for those who want to deepen, the case-history with the company’s usual transparent assertion that the numbers indicated are those they are able to trace and they are only to consider just the tip of the iceberg.
Ciphertrace also points out how the BTC remains dominant for trade in dark-web and payment of ransomware, despite the presence of cryptocurrency voted on anonymity (such as Monero, Zcash, Dash). Their practical use is therefore very low and fits into the middle, between the payment stages and the transformation stage of cryptocurrency into fiat as a tool for the obfuscation of the tracking.
However, a pioneer of the crypto-track, Sarah Meiklejohn lecturer at University College of London, has recently published a work in which it illustrates a methodology, through analyzing transactions of the most popular mixer-service, aimed at linking entry and exit addresses in cross-chain jobs. This brings us to the ‘connected’ because if an operator voluntarily or not relies on any form of KYC any tracking is of little : according to Coinfirm, a company specializing in the provision of regulation-compliance to the market, 69% do not use transparent procedures for the AML purposes.
In perspective not just quantitative, and by the way, interesting news about a recent U.N. report that would show that North Korea is a protagonist of rubbish for $2 billion USD articulated in 17 countries and 35 attacks (evidently successful ones, then there are also failed).
On the regulatory side FinCEN, the Financial Crime Enforcement Network of the U.S. Treasury, which on May 9 pointed out the rules (so already existing) for those who want to make from / to the USA operations in monetary services. That related to business models that provide for ‘convertible value transmission’ through virtual currencies. In practice, all the types of services present in the crypto rainbow are made up in the AML legislation provided by the BSA (Bank Secrecy ACT).
Almost in the same period the SEC’s FinHub released a framework, for the consumption of all the parties involved in the ICO issue, to delineate the scope of the Federal Laws on the Titles to the instrument itself.
In June the plenary of FATF and the G20 of Fukuoka took place. Among the two events there was a transmission of recommendations, from FAFT to G20, and a welcoming of them. FATF in practice wishes, for AML/CFT purposes to the state reference authorities, to submit to appropriate regulation the crypto-asset services providers .
In Italy the intell office of Bank of Italy (UIF) first published, in May in its newsletter, two pages about the risk of anomalous use of crypto-assets and then, with solertia following the FATF-G20 recommendations, a deepening (with the same title) on the cases of abnormal use.
The problem is always the same : we repeat it since time began and, thank goodness, someone with greater authority is charging us with our opinion. If an operator has an interest, for market reasons, to submit to regulation, it will certainly do so, or it will not be able to compete in its crypto-sector; if an operator has decided to work, driven by other reasons, in unregulated segments it will be able to do the same. The base technology is such that this can be allowed. What you continue to fail to understand (or perhaps you pretend not to understand, after more than ten years) is the technique : it is available independently and regardless of any control the regulators can put in place, with the patterns currently planned. If the crypto AML/CTF is, or is expected to become, a pain in the ass it will remain so. That is, unless to devise and apply suitable instruments to the purpose, which are not the current ones.
By singular coincidence about the FATF-G-20 issue and the reactions to Libra, in ‘related’ media, in the past two months, a sudden escalation of the links between terrorism / organized crime and cryptocurrency has been noted. NYT and MEMRI in the front line cite cases, methodologies and channels but never quantify the argument beyond the generic and colloquial ‘millions’ : you can’t therefore understand the scale of the phenomenon. In Italy, Il Sole-24-Ore reports that the National Antimafia and Counterterrorism Direction has dedicated 25 pages (!) of his annual report to the topic : the report has not yet been published so far ; when we can read it we attend to givr an account of the content of the 25 pages (!!), also because the anticipation of Il-Sole, bounced around, contains no proper analysis.
Finally, the proceeding of the national-cryptocurrencies. Russia continues on the road to de-dolarization, which began a while ago, assuming in this context the issuance of a gold-based cryptocurrency, voted exclusively to the regulation of international trade. So it resizes and specializes in the repeatedly adombrate project of a crypto-Ruble. China and Iran continue to provide signals to proceed along the announced path of short-term emitting.
This post is adaptation of a neuronal Italian/English AI translation by IBM Watson.