In the past September, major exchanges have inflowed a total of 127,700 BTC of “suspicious assets”, totaling $1.353 billion.
Editor’s note: According to the observations of the CoinHolmes anti-money laundering situational awareness platform, a digital asset visualization tracking platform, major digital asset exchanges are currently facing greater anti-money laundering pressure. There is not only terrorism-related address pollution, but also includes fund address and dark Many high-risk addresses such as Internet addresses and gambling addresses interact with exchanges. In the past September, major exchanges have inflowed a total of 127,700 BTC of “suspicious assets”, totaling $1.353 billion.
Anti-money laundering related policies and regulations
1) On the afternoon of September 22, 2020, the blockchain industry application anti-money laundering standard seminar was held in Beijing. In-depth discussions and exchanges were conducted on the content of the “General Requirements for Anti-Money Laundering in the Blockchain Industry Application”. At the same time, the companies participating in the drafting of the content carried out relevant reports on site, and finally reached the next step to establish the “Blockchain Industry Application Anti-money Laundering Technology Alliance “The consensus.
2) Recently, many OTC merchants have been on the central bank’s “disciplinary list”, and all bank cards under their personal status have stopped non-counter transactions, “no card opening for five years, and non-counter opening for three years.” This means that in addition to the traditional public security system investigations-frozen cards, OTC companies have also begun active supervision by local banks and central banks, and the latter’s crackdown is increasing.
3) On September 17, the US Financial Crime Enforcement Network (FinCEN) announced that it will amend the anti-money laundering (AML) and counter-terrorism financing (CTF) regulations in the financial sector. The new regulations aim to identify and combat illegal financial activities through strict record keeping and risk assessment requirements, and encryption companies also need to pay attention to regulatory changes. At present, the government has solicited public opinions on the proposed new regulations. The new regulations will also affect the compliance obligations of banks, credit unions, casinos, insurance companies, mutual funds, and traders or brokers in futures, commodities, gems and precious metals.
4) Tu Jianwei, vice president of Ant Group, pointed out that geopolitics and the development of digital economy have brought unprecedented challenges and changes to risk prevention and control, especially in the field of anti-money laundering. In response to these challenges, Ant Group has created SMART AML intelligent anti-money laundering solutions, and together with global ecological cooperation agencies, embraces the wave of digital economy through intelligent anti-money laundering, and provides inclusive and green financial services to more users around the world.
5) On September 25, the first Bund Conference held in Shanghai released the intelligent anti-money laundering white paper “Promoting Risk Information Sharing Technology-Blockchain Integration into Financial Crime Compliance”. It is understood that this is the first application of blockchain technology in the field of anti-money laundering joint defense. It can help anti-money laundering agencies accurately identify high-risk information and improve the prevention and control of money laundering risks while taking into account the confidentiality of anti-money laundering information and protecting user data. According to the white paper, due to the security and non-tampering characteristics of blockchain technology, it can not only ensure that every data record on the chain is true and reliable, but also can be audited and consulted at any time, effectively reducing the cost of trust between institutions and improving prevention Money laundering risks and efficiency in fighting financial crimes.
6) On September 23, news about whether to implement the new “KYC and anti-money laundering” decree of the South Korean government caused confusion in South Korean crypto exchanges. Although many exchanges have established compliance infrastructure to allow financial regulators to supervise, the exchanges are still uncertain about their legal obligations in this regard. According to the terms of the new legal amendment that will take effect in March 2021, virtual asset service providers (VASP) are obliged to confirm the real names of their users. However, this measure conflicts with the relevant provisions of the Real-Name Financial Transactions and Confidentiality Law and the Personal Information Protection Law.
7) Shyft Network, a well-known participant in the Financial Action Task Force (FATF) AML compliance competition, announced today that it is adding Huobi, Bitfinex and Tether to its cryptocurrency-focused anti-money laundering (AML) platform, and A “Governance Working Group” was established.
8) The Financial Services Agency of Japan issued the “2020 Financial Administrative Guidelines” on August 31, mentioning virtual currency and blockchain. Specifically, regarding virtual currencies, it will strengthen anti-money laundering (AML) and combating terrorist financing (CFT) measures, and play a leading role in adding rules to virtual currencies and stablecoins. Regarding the blockchain, it will lead the discussion on the application of blockchain in the financial system in Japan and abroad.
CoinHolmes interpretation: All countries in the world intend to strengthen the supervision of the cryptocurrency market. The most direct cause is the rampant activities of drug trafficking, corruption, money laundering and terrorist financing through cryptocurrency in recent years. Therefore, countries urgently need to strengthen the cryptocurrency market. Supervision. However, at present, the judicial department is still facing greater technical difficulties in the supervision of the encrypted market, and there is an urgent need for a professional cybercrime tracking chain data analysis system to assist in the investigation and hunting of criminals.
Encrypted asset related cases
1) The results of the first instance of the PlusToken network pyramid scheme prosecuted by the Procuratorate of the Yancheng Economic Development Zone of Jiangsu Province have been made public: the court sentenced Chen, Ding, Peng and other 16 defendants for two to eleven years for organizing and leading pyramid schemes. In addition to fixed-term imprisonment and fines, the stolen goods, stolen money and fruits involved in the case, and criminal tools shall be confiscated and turned over to the state treasury.
2) Xi’an High-tech Zone Public Security Bureau arrested suspects related to virtual currency fraud on September 2. The gang previously published false information about the virtual currency BRTR on the Internet, enticing the masses to buy it, and the amount of fraud has reached more than 5 million yuan in just one month. Based on the investigative clues and confessions of the suspects collected earlier, the police handling the case has recovered all the funds involved in the case of more than 5 million yuan and frozen them in accordance with the law. At present, the case is still under further trial.
3) On September 21, the Donghu New Technology Development Division of Wuhan Public Security Bureau successfully eliminated a fraud group. The police investigation found that the gang used the high return of virtual currency speculation as a bait to attract investors to invest, and then implemented a fraud gang. At present, the police have known the situation of a number of deceived persons, involving a sum of nearly 300,000 yuan. The four persons involved in the case, including Cao, Luo, Chen, and Yuan, have been criminally detained by Dongxin police for being involved in fraud. The case is being dig deeper.
4) According to the news on September 17th, Guangdong police has strongly promoted the in-depth development of the “Net Net 2020” special operation this year, focusing on the cybercrime ecology, and cracking down on prominent cyber crimes throughout the chain. As of the end of August, the province had detected more than 1,770 cyber-criminal property cases and criminally detained more than 8,740 people. It is understood that the Guangdong police focused on cracking down on crimes in the black and gray industry, and eliminated 21 criminal gangs that hidden behind the scenes and provided technical support such as back-office maintenance, and eliminated those that provided black cards, “kill you”, Trojan horses and other tools. There were 11 criminal gangs, and 9 platforms including online gambling, online pornography, online pyramid schemes, and fund settlement were eliminated. The department notified the first case of using USDT digital currency to provide online payment services for illegal and criminal activities detected by Huizhou police.
5) Beijing Daxing Public Security Bureau reported today that the police recently successfully destroyed a group of dens that illegally absorbed public deposits in the name of speculating “digital currency” and detained four suspects for criminal purposes. It is reported that the investment funds of more than 20 million yuan from more than 1,000 investors involved were trapped. The four suspects made more than 2 million yuan in profits.
6) Recently, the Shanghai Minhang police smashed a criminal gang that carried out fraud in the name of investing in virtual currencies and arrested 35 criminal suspects. The scam group uses phone calls and WeChat to find potential victims who are interested in investing in virtual currency, pulls them into the investment WeChat group, and tricks the victim to download the “bitex”, “back” and “bitbank” platform for virtual currency investment, defrauding the victim to invest the principal. Commit fraud crimes. The gang was involved in more than ten cases, involving more than 800,000 people, and more than 100 victims.
CoinHolmes interpretation: It can be intuitively felt that in recent years, police in various countries around the world have dealt with more and more cases of various types of cryptocurrency, but at present many cases are still traditional financial, telecommunication fraud and other cases radiating to the field of encrypted assets. This means that once the field of encrypted assets becomes the focus of investigation and elimination, similar cases will become more frequent.
Case review-PlusToken
PlusToken claims to be a “cryptocurrency wallet and exchange” registered in South Korea. Under the banner of Yu’e Bao in the digital age, it helps users use smart dogs to move bricks. The initial idea of the product is actually good, but in order to attract investors, PlusToken promises to give investors 10%-30% of monthly interest, and then designs a hierarchical incentive system. The high reward mechanism promotes the continuous development of the hierarchy, reaching the highest 3,000 floors.
With its attractive benefit induction and hierarchical incentive system, PlusToken soon gathered valuable digital assets including 200,000 BTC, 780,000 ETH, and 26 million EOS, involving more than 40 billion yuan in funds. More than 2 million people were involved, with a wide range of influence and great harm.
After PlusToken was reported by users that it was unable to withdraw the coin, PeckShield immediately intervened in a follow-up investigation on the flow of its funds, and locked and monitored several key addresses involved in its wallet. The above picture is the use of CoinHolmes, a digital asset tracking tool developed by PeckShield, to review some assets of PlusToken ETH and track the flow of funds.
As shown in the above figure, we found that the transfer path of assets on the entire chain is relatively complicated, roughly going through multi-layer decentralized transfers, mixed currency service systems, and various KYC-free service organizations. There are even some assets that will flow into dark web channels. After some operations, an asset will be woven into a dense and complex network. In addition, many addresses are anonymous on-chain addresses and change addresses, which creates a big technical problem for locking off-road assets.
On the whole, the transfer path of assets on the chain is more complicated, and there is greater complexity in technical tracking. PeckShield is continuously monitoring its related addresses and teaming up with all parties in the blockchain ecosystem to track and mark, and at the same time assist the police in tracking digital assets at risk.
CoinHolmes interpretation: Digital asset tracking and AML anti-money laundering face more complex technical difficulties. On the one hand, the digital asset market is unclear, and most of the stolen money is easily washed out through exchanges. On the other hand, asset transfer on the chain faces a mixed currency service system, Avoiding layers of obstacles such as KYC service agencies brings greater technical challenges to asset tracking.
Overview of AML anti-money laundering situation data:
Through on-chain data monitoring, we found that there are frequent interactions between various high-risk addresses such as capital disk addresses, dark web addresses, and gambling addresses, and exchange addresses. The CoinHolmes team defines this type of behavior as “suspicious assets”, that is, the inflow and outflow of stolen money, which can objectively reflect the current challenges faced by crypto assets in anti-money laundering.
In September, PeckShield has counted the total inflows of “suspicious assets” in the major exchanges in the address label of 127,700 BTC, totaling US$1.353 billion, among which the top ten are Binance, Coinbase, HitBTC, Huobi, KuCoin, Kraken, Luno, Bitget, OKEx, Bittrex.
In September, PeckShield has counted that the major exchanges in the address label outflowed a total of 62,700 “suspicious assets” for a total of 664 million US dollars. Among them, the top ten are Binance, Huobi, Bitget, ZB, Bithumb, OKEx, Bittrex, BitMEX, Gemini, Coinbase.
