New Frontiers in Crypto- Money Laundering: Chain Hopping Accounts for $7bn of Cryptocrime transactions.

An interesting new report from Blockchain experts’ Elliptic claims that crypto cross-chain or asset hopping crime has risen significantly recently and now accounts for $7 billion in the laundering of cryptocurrencies.

Chain crossing is not new – it was highlighted in the U.K.’s Third National Risk Assessment Of Money Laundering And Terrorist Financing published In December 2020. The national risk assessment described chain hopping as a form of cryptocurrency “obfuscation “similar to cryptoasset mixing, which is where mixers or tumblers obfuscate the source of funds by pooling and then re-depositing funds into different wallets.

According to Elliptic, “Cross chain crime refers to the swapping of cryptoassets between different tokens or block chains – often in rapid succession and with no legitimate business purpose – to obfuscate their criminal origin. “

Elliptic’s latest “State Of Cross Chain Crime Report” records that cross chain crime is rising at a faster rate than predicted. Elliptic suggests that criminals are now looking at cross chain crime as a way to avoid detection from the authorities because ID verification is not required by many cross-chain service providers.

Excluding centralised exchanges, Elliptic identifies three main types of crypto-asset service providers feeding this market:

–         decentralised providers allowing cross asset swaps on the same block chain.

–         decentralised Cross chain providers, allowing cross chain swaps across assets on different block chain platforms.

–         coin swap providers – often anonymous providers that allow centralised exchanges between different assets without taking our identity information.

BSQ maintains a watching brief on the latest developments in crypto crime and cryptocurrency regulation.

Companies or individuals requiring advice on AML and KYC compliance measures or pending investigations or prosecutions in the crypto industry should contact our London offices on (020) 3858 0851.