Earlier this week, ministers from the world's top economies, the G7, called for greater speed as financial watchdogs introduce comprehensive crypto regulation. This comes shortly after Terra's demise saw several crypto users suffer considerable losses in the space of a week. G7 Contacts FSB to Hurry Things Up The stablecoin failed to maintain its dollar peg and crashed as low as $0.07, with sister token LUNA not far behind. This created a ripple effect as general market anxiety destabilized even…
Most crypto-assets can revolutionize money transfers and global payments’ efficiency. However, some of their features heighten terrorist financing and money laundering risks. The scale of illegal use of crypto funds is significant. Above all, it emphasizes the need for CFT/AML supervision and regulation.
In 2019, about $11 billion (1.1%) of all cryptocurrency transactions were linked to criminal-related activities. As a result, regulators worldwide responsible for Anti-money laundering enforcement have investigated illegal activities involving crypto assets.
If Cryptos become more than a sideshow in the financial world, regulation will be a vital part. Today, we will focus on some of the largest crypto funds seizures and the war on illegal use of cryptocurrencies.
$1 Billion Worth of Bitcoin
At the top of our list are thousands of Bitcoins worth $1 billion that the U.S. government seized in 2020. The cryptocurrencies were reportedly linked to the sale of illegal drugs and goods via Silk Road, a dark web marketplace shut down in 2013.
During its days, Silk Road was ranked as the most notorious online criminal activities marketplace. However, after the successful conviction of its founder, Ross Ulbricht, a top question remained. Where did all the money go?
The U.S. agencies traced the illegal funds after noticing a transfer from a Bitcoin wallet. This wallet was none other than the fourth-largest balance in the world. The IRS agents pinpoint 54 new bitcoin transactions by Silk Road assailants, which appeared to be proceeds of illicit activities.
$160 Million Crypto Funds
In June 2021, U.K.’s Metropolitan Police announced the largest cryptocurrency confiscation in history at the time, which is also one of the largest seizures in the world. This was about £114 Million and more than double the amount seized by Scotland Yard the whole of 2020. The authorities discovered this amount with the help of intelligence. More exactly, they were tipped about the transfer of a vast amount in relation with criminal activities.
The crypto assets seized during a press release are reported to be linked to a money-laundering ring under investigation by the officials. However, the officials did not pinpoint the exact cryptocurrencies among the confiscated funds because investigations are still underway.
Cash transactions are still the global leaders in funding illicit activities and money laundering. Still, changes in technology have introduced more sophisticated methods. Cryptocurrencies have also become the payment of choice for ransomware attackers.
4.2 Billion Connected to Plus Token Ponzi Scheme
The months-long saga of the alleged Ponzi Scheme took a new turn after the Chinese Police seized $4.2 billion worth of crypto assets connected to this scheme. Among the confiscated funds were 833,083 in ETH and 194,775 BTC. Also, there were 27.6 million EOS, 487 million XRP, 6 billion DOGE, 79,581 BCH, 213,724 USDT, 74,167.
DASH and 1.4 million LTC.
PlusToken was a South Korea-based exchange where millions of people invested but were unable to withdraw their funds. The Fraudsters dumped the embezzled funds into crypto exchanges in an attempt to hide them.
The investment promised high rewards on returns – from 8% to 16%. The developers marketed mostly in South Korea and China. However, some of the exchange’s customers were came from North America and Europe.
The scheme targeted a mainstream audience of individuals not savvy about cryptos, whereby about 3 million people were reported as fraud. Later an arrest and conviction of fifteen individuals in connection with this case took the headlines.
$408 Million by British Police
In July 2021, the British seized about £294 million ($408 Million) as part of an investigation into money laundering by organized criminal groups who moved to crypto-assets to wash their dirty money.
The police arrested a 39-year old lady was on suspicion of money laundering. This happened after they discovered the first haul of $250 million. However, the authorities declined to disclose the exact cryptocurrencies that were part of the money laundering scheme. Some reporters, however, claimed that the crypto assets seized were in Bitcoin.
$3 Billion in Bitcoin
The United States Department of Justice seized about 70,000 Bitcoins in February 2021 that were tied to corrupt federal agents: Carl Mark Force IV and Shaun Bridges. Both men were investigators in a case that involved the Silk Road. However, they both finished in prison for conducting some crime sprees of their own, including robbery and extortion. The police later confiscated the funds from a person under the pseudonym of Individual X.
In addition to the 70,000 Bitcoins, Individual X’s contained a similar amount of spinoff currencies. Among them were Bitcoin Gold, Bitcoin S.V., and Bitcoin Cash. These other currencies combined are worth about $50 million. All the currencies are presently in a crypto wallet under the control of the Department of Justice.
In the past, the agency sold seized Bitcoins through auction sales conducted by U.S. Marshals Service. These auctions include Ross Ulbricht’s fortune – who ran Silk Road and is currently serving a life sentence in prison.
$47 Million Crypto Funds in South Korea
South Korean authorities seized more than Won53bn worth of Ethereum, bitcoin, and other crypto assets from about 12,000 people in June 2021 who were accused of evading tax. The seizure was after a broader probe into the tax owed by about 140,000 people. This was the most significant crypto seizure in Korean history.
Just like the U.S., South Korea is working to prevent tax evasion through crypto transactions. This forms a part of a wider global trend towards enhanced regulation of cryptocurrencies. South Korea’s 60 crypto exchanges ought to meet stringent regulations to continue operating from September 2021.
Regulatory Authorities’ seizure of crypto assets has been growing in recent years. Cryptocurrencies provide speed and anonymity in transactions, but the authorities can still crackdown on illegal transactions.
This regulation will help establish order to impede the negative use of cryptocurrencies. Responsible agencies have assured that they will not back down on the war against the illegal application of cryptocurrencies.
While most crypto users are legit and want to trade, it is essential to recognize some illegal uses. Hence, regulation is vital in preventing cybercrime.
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