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Over 13% of Bitcoin Crime Proceeds Laundered Through 'Privacy Wallets': Elliptic
The number of crypto criminals using so-called privacy wallets to help hide their identities is on the rise, according to analytics firm Elliptic.
The number of criminals using so-called privacy wallets to facilitate crypto money laundering is on the rise, according to Elliptic, a U.K.-based blockchain analytics company.
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The firm estimates that over 13% of the proceeds from crime involving bitcoin are now being transferred through such wallets, up from just 2% in 2019, according to a report published Wednesday.
Elliptic said privacy wallets, such as Wasabi Wallet, have tools that help obfuscate the identity of users. An example is the automatic peer matching and sending of CoinJoin transactions, in which bitcoin is mixed within one transaction.
The wallets are proving popular as a means to avoid the risks of centralized coin-mixing services, such as theft of funds by service providers and authorities running "honeypot" sites, per the report.
In 2020, Elliptic estimates $160 million in bitcoin from the darknet, thefts and scams has been laundered through privacy wallets.
The hack of prominent Twitter accounts in the summer promoted a crypto scam that raised $120,000 in different cryptocurrencies, much of which was laundered through Wasabi Wallet, the report indicated. The same thing is said to have happened following the September KuCoin exchange hack where $280 million in crypto stolen.
See also: Payza Founders Sentenced in $250M Money Laundering Case
Elliptic acknowledged there are legitimate uses for privacy wallets, but said criminals have been quick to latch onto the new services.
The trend poses a "growing challenge for regulators, law enforcement and compliance professionals seeking to combat financial crime in cryptoassets," the firm said.
CORRECTION (16:05 UTC, Dec. 9 2020): Fixed error in percentages in second paragraph.
Tanzeel Akhtar
Tanzeel Akhtar has contributed to The Wall Street Journal, BBC, Bloomberg, CNBC, Forbes Africa, Financial Times, The Street, Citywire, Investing.com, Euromoney, Yahoo! Finance, Benzinga, Kitco News, African Business Magazine, Hedge Week, Campden Family Office, Modern Investor, Spear's Wealth Management Magazine, Global Investor, ETF.com, ETF Stream, CIO UK, Funds Global Asia, Portfolio Institutional, Interactive Investor, Bitcoin Magazine, CryptoNews.com, Bitcoin.com, The Local, The Next Web, Mining Journal, Money Marketing, Marketing Week and more. Tanzeel trained as a foreign correspondent at the University of Helsinki, Finland and newspaper journalist at the University of Central Lancashire, UK. She holds a BA (Honours) in English Literature from the Manchester Metropolitan University, UK and completed a semester abroad as an ERASMUS student at the National and Kapodistrian University of Athens, Greece. She is NCTJ Qualified - Media Law, Public Administration and passed the Shorthand 100WPM with distinction. She does not currently hold value in any digital currencies or projects.
