Chainalysis, a blockchain analytics firm based in the United States and Denmark, recently announced that two individual groups had stolen more than $1 billion in crypto. The hackers have apparently obtained around $90 million per hack on average in the past several years. They have thus been running a lucrative criminal operation across the major crypto markets of the world.
Companies like Chainalysis work with giant cryptocurrency exchanges to eliminate suspicious transactions from entering the system of trading platforms. It is possible to track most transactions on major public blockchain networks like Ethereum and Bitcoin. However, cryptocurrency hackers often adopt different methods to tangle transactions and their origins.
At the beginning of January, Cryptopia was hacked, and Binance, the world’s largest crypto exchange was able to freeze the stolen user funds immediately.
Their update on 16 January read :
Just checked, we were able to freeze some of the funds. I don’t understand why the hackers keep sending to Binance. Social media will be pretty fast to report it, and we will freeze it. It’s a high-risk maneuver for them.
However, well-maintained criminal organizations make it difficult to track suspicious transactions. The two hacker groups, termed by Chainalysis as Alpha and Beta apparently wait on an average of 112 days to convert and launder their funds. This makes it almost impossible to trace the crypto transactions. The report of Chainalysis further mentioned that Beta waited for nearly two years on one occasion to withdraw funds stolen in a hacking attack.
The report read :
The hackers typically move stolen funds through a complex array of wallets and exchanges in an attempt to disguise the funds’ criminal origins. The hackers then often observe a quiet period of 40 or more days in which they don’t move funds, waiting until interest in the theft has died down. Once they feel safe, they move quickly.
The researchers at Chainalysis also added, “Cooperation between exchanges also goes a long way to help fight crime in this ecosystem. Neutral intermediaries between exchanges can play an important role in this effort.”
When speaking with The Wall Street Journal, Chainalysis chief economist Philip Gradwell announced that it is challenging for major crypto exchanges with strict Know Your Customer (KYC) and Anti-Money Laundering (AML) policies to weed out stolen funds hitting exchanges.
In a recent update, Bithumb, UPbit, Korbit, and Coinone, four of the largest crypto exchanges in South Korea, came together this week to crack down on money laundering via cryptocurrency. The exchanges stated in a statement translated by CCN, “The cooperation between exchanges will improve the efficiency of anti-money laundering policies. If exchanges work together in obtaining identities of customers through a strict know-your-customer system and monitoring transactions, it will prevent money laundering using cryptocurrencies and create a safer environment for cryptocurrency trading.”
If exchanges keep partnering to prevent money laundering in crypto markets, hackers are soon to find no space in the crypto world.