When cryptocurrencies were first introduced, they promised to deliver low to zero transaction costs, unlimited withdrawals and purchases, fast transaction speeds, and enhanced security and privacy. These features set crypto apart from centralized currencies and attracted millions of users in just a few years. However, the anonymity, security and privacy offered by blockchain also drew in criminals who were looking for a way to move their ill-gotten gains away from the prying eyes of law enforcement.
A 2021 report by blockchain analysis firm Chainalysis revealed that criminals laundered a whopping $8.6 billion in cryptocurrency in 2021 alone. The report stated that criminals are transferring billions of dollars’ worth of cryptos to services that seemed to be tailor-made for money laundering, stating that law enforcement could deal a major blow to crypto-based crime by disrupting these services.
A Europol Report from January points to criminal networks with a flair for large-scale money laundering that have adopted cryptocurrencies and begun offering money-laundering services to other criminals.
During the 6th Global Conference on Criminal Finances and Cryptocurrencies hosted by Europol at The Hague, experts conceded that the proliferation of blockchain and crypto has “facilitated new forms of crime.” Speakers, who included representatives of European law enforcement, speakers and experts from major cryptocurrency analysis firms, said criminals are increasingly adopting crypto as it expands into “practically every nation and sector.”
Cryptos have been involved in match-fixing within sports, drug smuggling and, alarmingly, financing the acquisition, manufacture and possession as well as export of weapons of mass destruction. Even so, Europol believes that blockchain has “unique characteristics” that will allow law enforcement to investigate all forms of organized crime syndicates along with the money laundering networks they use to move their funds. Furthermore, blockchain will also make it possible to recover stolen money.
Addressing organized crime on blockchain will call for the right capacity and tools as well as cooperation, the report observed. Europol stated that regulators, law enforcement, the private sector and all the entities involved in combating crime are already working to address the rise of money laundering via blockchain. This includes recently passed legislation that would ensure cryptos are treated like other assets from a legal perspective.
More specifically, the new regulations will require that crypto exchanges collect and then store identifying data for people making cryptocurrency transactions and turn that data in to authorities conducting money-laundering investigations. This would allow authorities to make definitive strikes against criminal networks that have turned to blockchain to launder their money.
As law enforcement registers successes against criminal entities looking to exploit the strengths of blockchain technology, the entire industry, including companies such as HIVE Blockchain Technologies Ltd. (NASDAQ: HIVE) (TSX.V: HIVE), is likely to enjoy widespread adoption as it cements its reputation as a technology that is here for everyone’s good.
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