Blockchain analytics firm, Chainalysis recently reported that two groups have stolen over a billion dollars’ worth of cryptocurrencies over the past few years. The main question now is how the funds were cashed out.
According to the transactions and addresses traced by Chainalysis, the hackers stole roughly 90 million USD per hack.
Chainalysis works to exchanges to stop suspicious transactions
Chainalysis partners with major cryptocurrency exchanges to stop suspicious transactions from entering the system of trading platforms. This is one of the ways to stop the cybercriminals from cashing out the funds.
The company partnered with Binance in October last year to tackle money laundering issues on the exchange. The partnership between blockchain analytics firms and exchanges reduces liability in dealing with transactions or addresses used by criminal groups.
Even though transactions on major blockchain networks such as Bitcoin and Ethereum can be tracked, cybercriminals use various methods to hide the transactions and their origins. Earlier this month, Binance was able to freeze stolen funds from New Zealand-based crypto exchange Cryptopia after it was hacked.
Changpeng Zhao, Binance’s CEO tweeted about this development.
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. https://t.co/i0PeahLzic
— CZ Binance (@cz_binance) January 16, 2019
Chainalysis, however, pointed out that for criminal organizations well-coordinated like the examined two, it is difficult to track suspicious transactions. Usually, the hackers are patient and make use of sophisticated tools in hiding transaction data.
The two criminal groups dubbed. Alpha and Beta are reported to wait for at least 112 days before converting and laundering their funds. This is to ensure that authorities find it hard to trace their transactions.
The second group, Beta on one occasion waited for roughly two years before withdrawing its stolen funds. This made it easier for them to eliminate transaction details that could implicate them.
According to the report, “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.”
During an interview with The Wall Street Journal, Chainalysis chief economist Philip Gradwell stated that it is tough for the major exchanges to track down stolen funds despite the implementation of Know Your Customer (KYC) and Anti-Money Laundering (AML) policies.
Researchers at Chainalysis pointed out that hackers have improved methods to disguise transactions. The only way to stop suspicious transactions now would be for exchanges to collaborate, the report added.
The researchers stated that “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.”
Exchanges seem to have heeded the advice. Cryptoheroes recently reported that four of the largest crypto exchanges in South Korea have partnered to reduce money laundering via cryptocurrencies.
The four exchanges, Bithumb, UPbit, Korbit, and Coinone, pointed out that their collaboration with banks and authorities will aid in their fight against money laundering.
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