Crypto Opinions & News How cybercriminals launder dirty crypto

[vtqhtr413]

Content source

https://www.kaspersky.com/blog/crypto-laundering-and-ransomware/48186/

The simplest thing for cybercriminals to do with dirty crypto is spread it to fake wallets. In the case of very large-scale operations, such as the BitFinex hack or the Sky Mavis heist, we could be talking several thousand fake wallets. But since all transactions are written to the blockchain anyway, using fake wallets doesn’t solve the problem of tracing funds. As such, this technique is usually deployed only in the early stages of laundering in order to, first, muddy the trail, and, second, break up large sums into smaller ones, which can then by laundered more easily in other ways.Dirty crypto can often lie in those fake wallets for a long time. This is sometimes due to greedy cybercriminals waiting for the exchange rate to improve. In the case of transactions large enough to attract the attention of law enforcement, the reason is caution. Attackers try to keep a low profile until the scrutiny dies down and the funds become easier to withdraw.

 

[MuzzMelbourne]

Yeah, anyone can follow any block's distribution throughout the network, that's one of the beauty's of Blockchain, transparency.

Identifying who owns the wallet doing the transactions is the catch, that's one of the other beauty's of Blockchain, anonymity.

If a naughty person is smart and organised enough, they can convert a single $1M wallet into 1 million $1 wallets very quickly and then cashout.

For the good guy's, its a case of being poorly resourced and diminishing returns for effort, so, for the most part, why bother.

Anyway, the political elite are the true organised criminals perpetrating the biggest frauds. Chasing cybercriminals is a smoke screen.

 

[vtqhtr413]

If a naughty person is smart and organised enough, they can convert a single $1M wallet into 1 million $1 wallets very quickly and then cashout

A couple months ago, someone tried to extract one penny from my bank account, the bank caught it and notified me of the issue, it was a loan officer that I spoke with and she told me that this type of fraud has become a thing

 

[Zero Knowledge]

If a naughty person is smart and organised enough, they can convert a single $1M wallet into 1 million $1 wallets very quickly and then cashout.

For the good guy's, its a case of being poorly resourced and diminishing returns for effort, so, for the most part, why bother.

Muzz you probably know crypto better than I do but here is what I see. Many bad actors won't do that or go to the effort splitting up illicit funds to millions of wallets. There are money laundering systems set up in every country of the world that deal with 'dirty money' and stolen or tainted crypto for a hefty commission.

There are some pretty good blockchain experts and companies today, these days it's pretty hard to wash dirty crypto through exchanges and most would be done from person to person in real life.

Look at all the big crypto heists in the last 10 years and the hackers or people with the stolen goods can't cash the coins out. They are stuck with it because no one wants to touch that much money and the mixers keep getting shut down. There is a case of too much stolen money to be able to launder it successfully.

A couple months ago, someone tried to extract one penny from my bank account, the bank caught it and notified me of the issue, it was a loan officer that I spoke with and she told me that this type of fraud has become a thing

Bryan the reason why they do small transactions on credit card and bank accounts is to test if it's valid credit card or there is money in the bank. Then they hit the card or account with bigger transactions. Why banks still allow this to happen I have no idea?

They know small transactions are a precursor to fraud, but I guess a lot of ecommerce and payment services do small transactions to verify accounts that the allow them to go through.

 

[MuzzMelbourne]

There are money laundering systems set up in every country of the world that deal with 'dirty money' and stolen or tainted crypto for a hefty commission...

I totally agree, ZK.

I think Bryan's and my example was that, the problem exists at both ends of the 'dollar' spectrum as an indication of how difficult detection/prevention is for the industry and law enforcement.

For example, I don't know about where you are but, increasingly, crypto ATM's are popping up in some bizarre locations here and will issues fiat all day, every day, without regard of the crypto's origin.

Although this is primarily Bitcoin atm, other tokens will be added over time. I suspect USDT or Ether will be along soon.

If I were looking at dealing in illicit goods/substances at small to medium scale, payment via Blockchain tokens is becoming a valid option. While multi-national cartel's and bad exchanges are being busted in increasing numbers they are usually run by idiots who have to outsource the code etc. etc. and run around in Ferrari's. Like shooting fish in a barrel for the law.

But, I think, we all know the vast, vast majority of crypto nastiness goes undetected and its the very nature of the beast that will see an increasing use by scumbags.

And, add the basically borderless World economy we all operate in... blah, blah...

 

[Trident]

They know small transactions are a precursor to fraud, but I guess a lot of ecommerce and payment services do small transactions to verify accounts that the allow them to go through.

Normally wherever reservations (not prepaid) are created (hotels, posh restaurants, private clubs) they will attempt to pre-authorise or charge & refund the card for 0.01 or 1.00 or something similar. Pre-auth will then expire in accordance with the bank policies, in the UK this is within 7 days whilst in other countries specifically in Eastern Europe or the Middle East, it may take up to 45 days.
Frequently attackers will create such reservations to establish whether the card is valid (if it is not then the reservation will be cancelled).

Normally the bank and the merchant will use platforms that detect fraud by analysing various digital fingerprints such as IP, hardware information, location and others. Sometimes they may decide to block the transaction but other times, the overall score of suspicion is not high enough.

In the UK now all banks require 2FA (3D Secure) and soon, it will only be done via the app and not via SMS code (due to mobile carriers staff that lacks care and possibility of abuse).

 

[Zero Knowledge]

If I were looking at dealing in illicit goods/substances at small to medium scale, payment via Blockchain tokens is becoming a valid option. While multi-national cartel's and bad exchanges are being busted in increasing numbers they are usually run by idiots who have to outsource the code etc. etc. and run around in Ferrari's. Like shooting fish in a barrel for the law.

Muzz it's been used for buying/selling illicit/stolen goods and illicit substances since it was invented. That was its main draw card when it was underground, now it's mainstream and now every man and his dog want to get rich quick. And besides speculation and investment that still remains the case though it's more for speculation these days than anything else. Every legit crypto ecommerce site has failed so there isn't much of a use case. It is what it is!

Yes, you get the idiots and crypto bros in the crypto scene driving in Ferraris or Lambos, but the smart ones are sitting on some island in the beach in Kokomo with model girlfriends drinking mojitos and enjoying life after cashing out.

 

[MuzzMelbourne]

...It is what it is!...

Full of potential... just needs the right direction. My portfolio of obscure tokens depends on it...

 

[Trident]

Every legit crypto ecommerce site has failed so there isn't much of a use case. It is what it is!

They have failed and they will continue to fail. The same can be said about VPNs with no logs, gift cards, dating sites and many other places that provide anonymity without any verification and control.
All these “tools” are honeypot for crime, have been and will always be.
When nobody is monitoring and controlling what you do, nobody is monitoring and controlling what others can do to you either. You gain freedom and you also lose freedom.

Giving powerful tools to the wide, anonymous masses inevitably leads to abuse and dodgy stuff.

Indeed, it is what it is.

 

[Zero Knowledge]

All these “tools” are honeypot for crime, have been and will always be.

'Criminals' are the first to adapt to new technology, systems and services. They depend on it to keep ahead of the law and they do it by finding loopholes or ways around the system. That's why it's a cat and mouse game. one side adapts after the other adapts and it goes around in a circle. It doesn't take long for the bad guys to adjust; one new generation replaces the last and builds upon the last by finding new ways to work within the system we have 'created' in our societies.

It's a simple case of evolution and adaptation at work .

When nobody is monitoring and controlling what you do, nobody is monitoring and controlling what others can do to you either. You gain freedom and you also lose freedom.

It's a trade-off between freedom/privacy/agency/personal choice vs security in the end, what are people willing to sacrifice or give up to feel safe.