So a big concern of cryptocurrency critics is that crypto can be used to enable financial crimes, like money laundering.
So, how would that work? For example, bitcoin addresses, which you can think of as a bank account number, can’t be traced to individual people and can only be accessed by the owner of the crypto wallet with their login credentials.
So, this means that – even if everything is recorded on a ledger and transactions can be linked to one another – if you suspect there’s something a little iffy going on, connecting it to a person or business would be difficult.
And, when it’s time to cash out, there’s this thing called bitcoin mixers (or tumblers), which provide customers with a completely new bitcoin address to send their money to. From there, the mixing service will payout bitcoin reserves into other bitcoin addresses provided by the customer and charge a mixing fee. The payments from the reserve will be random and in varying amounts to make it harder to flag.
On Tuesday, authorities arrested a husband and wife duo, Ilya Lichtenstein and Heather Morgan, accused of attempting to launder 119,754 stolen bitcoin. At the time it was reportedly stolen, it was valued at US$71 million. At the time of the seizure, it was valued at US$4.5 billion.
The agency seized 94,000 bitcoin, valued at US$3.9 billion, which is the largest seizure in the government agency’s history.
The bitcoin in question is connected to a 2016 hack of crypto exchange Bitfinex, whereby the couple exploited a system security flaw and made several thousand unauthorized transactions, funneling the money into a crypto wallet. From there, they spent the money on gold, NFTs and gift cards. The two also reportedly used techniques like splitting the transactions into thousands of smaller ones, exchanging them for other types of cryptocurrencies, like Monero.
The pair faces up to 20 years in prison for money laundering charges.
BTW: This is Morgan’s YouTube.
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