Binance and Huobi Received Over 52% of $2.8 Billion Illicit Bitcoin in 2019
Exchanges have always been a popular off-ramp for illicit cryptocurrency, in 2019, $2.8 billion in bitcoin have been moved from criminal entities to exchanges, of which over 52% have gone to the top two crypto exchanges Binance and Huobi, a latest Chainalysis report found.
According to the blockchain analysis company, crypto exchanges Binance and Huobi have received 27.6% and 24.7% of total illicit bitcoin to exchanges in 2019. The two major crypto trading platforms are thus responsible for over half of all illicit bitcoin, while all other exchanges combinedly contributed 47.8%.
The report continued that over 300,000 individual accounts at Binance and Huobi received Bitcoin from criminal sources over the course of 2019, among which 810 accounts took in a total of over $819 million in bitcoin from criminal sources, accounting for 75% of the total.
The analysis pointed out that OTC (Over The Counter) brokers were facilitating this activity. As OTC brokers typically have much lower KYC (Know Your Customer) requirements than the exchanges they operate on, some of them take advantage of this laxity to provide money laundering services to criminals, “usually first by exchanging bitcoin and other cryptocurrencies into tether as a stable intermediary currency before they presumably cash out into fiat”.
Out of the 100 major OTC brokers that allegedly provide money laundering services manually identified by Chainalysis, “70 are in the group of Huobi accounts receiving bitcoin from illicit sources, 32 of them are in the group of 810 accounts receiving the most illicit Bitcoin, and 20 of them received $1 million or more worth of illicit Bitcoin in 2019”.
That means these active OTC brokers are specializing in providing money laundering services to criminals. The report said that these top 100 OTC brokers received over $3 billion worth bitcoin in 2019 and many of them played a substantial role in the horrendous PlusToken scam.
As previously reported, Chinese crypto exchanges have been heavily favored in PlusToken withdrawals, among which Huobi processed nearly 50% of all withdrawals.
According to a recent report by China-based blockchain security firm PeckShield, China’s capital outflow via bitcoin-like cryptocurrencies over the past three years has reached $39.4 billion, accounting for more than 1% of the country’s $3 trillion foreign exchange reserves.
All the figures suggest that regulators should get immediate actions on anti-money laundering and call on exchanges to carry out more extensive due diligence on OTC brokers and other nested services operating on their platform.