Binance and Huobi cryptocurrency exchanges receives over 50% of the total cryptos used in criminal activities according to a report by Chainalysis, a cryptocurrency data analysis firm. The high figure comes at a time the former is on the edge of moving offices from the European Union as AMLD5 takes effect in the near future.
According to the report by Chainalysis, over $2.8 billion USD in Bitcoin (BTC) has been used by criminals in the past year, a sharp rise from the reported $522 million in 2018, with Binance and Huobi carrying most of the blame in facilitating the transfers. Binance, the world largest cryptocurrency exchange in trading volume and users, recorded 27.5% of that amount and Huobi recording 24.7% of the figure in 2019.
Binance remains committed to fighting money laundering and preventing fraud on its exchange despite the latest report showing the contrary. Binance Chief Compliance Officer, Samuel Lim, explained,
“We will continue to improve on our proprietary KYC and AML technology, as well as the third-party tools and partners we work with, to further strengthen our compliance standards.”
Once a criminal has received their ill-gotten gains in crypto the often face a huge problem of how to convert the cryptocurrency to fiat currency. This is where the Over the Counter (OTC) brokers come in handy and while most brokers run legit businesses, a big number are just money laundering fronts for criminal organizations. They are able to move large amounts of cryptocurrency in crypto exchanges. The OTC brokers mostly facilitate buyers and sellers who can’t or won’t go directly to the crypto exchange. They often facilitate large trades at an already set price.
Chainalysis was able to assemble a special group of 100 OTC brokers who facilitate the criminal activities and could be accounting for over 1% of total Bitcoin activity monthly. The report reads,
“70 of the OTC brokers in the Rogue 100 are in the group of Huobi accounts receiving Bitcoin from illicit sources. 32 of them are in the group of 810 accounts receiving the most illicit Bitcoin, and 20 of them received $1 million or more worth of illicit Bitcoin in 2019.”
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