Can you launder bitcoins

26.06.2019

In August, , a hacker stole , bitcoin from a cryptocurrency exchange called Bitfinex. On Tuesday, in Manhattan, a young married. Cybercriminals who attack companies, municipalities and individuals with ransomware often demand payment in the form of cryptocurrency. In one. primarily because laundering money using cryptocurrencies is easier than other methods. In movies, criminals often transport illicit money across borders using duffel bags or suitcases to evade authorities; however, that's not realistic in real life. CRYPTO TIMING ATTACKS

As I discovered last year, while reporting on state-sponsored North Korean hackers , thefts from digital-currency exchanges happen with alarming regularity. North Korean operatives particularly enjoy hacking digital bourses in South Korea. As of last April, one exchange, Bithumb, had been raided four times.

Exchanges are vulnerable because they often maintain escrow accounts holding coins in so-called hot wallets, which are connected to the Internet. Last year, Tom Robinson, who is the chief scientist at the blockchain-analytics firm Elliptic, explained to me the appeal of this kind of crime. Give them back to me. But if digital currency creates opportunities for thieves it also presents giant obstacles.

The desired end point of most exchange hacks is to convert stolen digital currency into fiat currency—pounds, euros, dollars. Launderers must also contend with the fact that coins are traceable. The ledger on which trades occur is immutable. It should always be possible to track stolen loot through its digital footprint. The problem of handling stolen bitcoin is not unlike that of smuggling a Picasso in the trunk of your car.

Stealing the painting is one thing; realizing any monetary gain for it is another. Morgan and Lichtenstein seem to have understood some of the dangerous terrain of the crypto laundry. Last year, Robinson, the Elliptic scientist, showed me a visualization of a peel chain. The diagram looked like an airline-magazine route map, in which several lines sprout from one dot and then converge on another.

The affidavit also details how the couple understood other, more sophisticated laundering techniques. One is known as chain hopping. This is when one type of coin is swapped for another—Bitcoin to Ethereum, for instance—to disguise its provenance. The blockchain-forensics firm Chainalysis recently published a report that detailed the growing use of chain hopping, particularly by North Korean criminal groups.

The preferred method is to use what is known as a DeFi decentralized finance platform, which swaps currencies without ever taking custody of the funds. DeFis are not required to have any know-your-customer procedures.

According to Chainalysis, in , North Korean hackers used a DeFi called Uniswap to launder the proceeds of a two-hundred-and-seventy-five-million-dollar theft from the KuCoin exchange—one of the largest hacks of any exchange ever. Morgan and Lichtenstein also allegedly moved coins to AlphaBay, a dark-Web marketplace that was shuttered by police in You can buy pretty much anything you want using digital currency on the dark Web, and nobody cares where you got your funds.

But it seems that the sums Morgan and Lichtenstein were looking to launder were too unwieldy to cash out by buying products. AlphaBay was simply a conduit for the stolen coins. When they attempted to open seven new accounts on one exchange using fake identities, the exchange could not verify the accounts, and froze their funds.

The couple ran into locked door after locked door. They spent some of the coins on N. They cashed out small amounts using gold trades and other techniques. Gurvais Grigg, a former F. Reading the affidavit, I found myself asking: How would the North Koreans have washed so many coins? They would have done it slowly. Criminal groups associated with North Korea leave large volumes of cryptocurrency untouched in digital wallets for years. They also would have used some of the same techniques that Morgan and Lichtenstein did: peel chains and chain hopping.

But they would have kept their real identities far away from any accounts handling the stolen coins. Certainly, they would have found a way to cash out large sums, probably using an exchange in a lax jurisdiction. According to a summary of recent transactions put together by The Record, this ranged from This huge fund movement alerted authorities to trace the wallet address of the hacker. The statement adds that some of the funds went to an account tied to a company called SalesFolk, which was owned by Morgan.

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