CipherTrace Releases Anti-Money Laundering Report for Q4 2019

Crypto-blockchain forensic project CipherTrace has released the anti-money laundering report for the last quarter of 2019, and the results are saddening, to say the least. The results indicate that the doubts raised by politicians globally are not mere speculations, but have a certain level of truth in them.

As per the report, there has been a sharp rise in cases of fraud and misrepresentation in the industry, with a year-on-year jump of an insane 533%. The industry incurred a total loss of a whopping $4.5 billion, which includes about $370.7 million of value lost in exchange thefts and hacks.

For the fourth quarter, the report listed a major fraud by Canadian crypto exchange Einstein, amounting to $12 million, which the infamous exchange executed via an exit scam. Likewise, the report also included the $70 million misappropriations of funds after its CEO of the Chinese exchange IDAX disappeared. CipherTrace also sheds light on the role of the banking sector in crypto-related doubtful activities. It said,

“In Q4 2019, CipherTrace Labs released results of a major study that found almost all the top 10 U.S. retail banks have illicit cryptocurrency MSBs—including crypto exchanges—transmitting funds on their payment networks. Analysis further revealed that a typical large U.S. bank processes billion annually in undetected cryptocurrency-related transfers. These clandestine operations create AML compliance risks because criminals must find ways to launder ill-gotten crypto profits.”

If the report is anything to go by, those who criticized the US Congress members for accusing the crypto industry of unlawful activities will have to reassess their stand. Last year, US President Donald Trump had accused cryptocurrencies of being the tool that facilitates anti-social activities like money laundering, however, he received strong backlash from the community. Contrastingly, the report supports the claims of anti-Bitcoin politicians.

All that said, the crypto industry is just about a decade old and is currently in a transition from being a “fast & easy money-making sector” to becoming a mature industry. Despite all this, the fraud in the crypto industry on a whole remains significantly lower than that in the traditional banking sector. For instance, as per a report published in Business Standard in August 2019, bank frauds for 2018-2019 in India alone stood at INR 71,543 crores, roughly more than $10 billion, a 74% increase from the previous year. This gives an idea regarding the global scenario in the banking sector.

Comparatively, the crypto industry, valued at $293 billion, is a dwarf as compared to the traditional banking industry ($7.2 trillion market cap). Still, the amount of fraud has risen significantly in all the financial segments, and singling out the crypto industry and accusing it on anti-social influence is not the right thing to do.

Nonetheless, the industry needs to really work hard on the direction of making it as clean as possible, so that it grows in terms of credibility and trust. You can read the complete report here.

Roxanne Williams

Roxanne Williams has recently joined as a market reporter for CryptoNewsZ - the 24/7 crypto news site, where she produces recent stories, technical analysis and price updates on world's leading cryptocurrencies.

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