How Bitcoin is used for international money laundering

Bitcoin is easy to use, enabling a person to circumvent international legislation and borders.

Bitcoin is easy to use, enabling a person to circumvent international legislation and borders.

Published Jul 15, 2021


Some people think that Bitcoin is the cyber criminals’ preferred currency. That’s because many people associate it with the purchase of illicit goods. As a digital currency, some people think Bitcoin is evil because ransomware attacks demand payments via Bitcoin. But why has Bitcoin appealed to criminals in the past?

Well, the answer is the anonymity level that this digital currency affords the user. What’s more, Bitcoin is easy to use, enabling a person to circumvent international legislation and borders. Today, criminals are using cybercrime to generate large sums of money. Consequently, they need a method for cashing out their money without authorities detecting them. Apart from using Bitcoin to engage in cybercrimes, some crooks use it as a cash-out strategy for laundering their crime proceeds.

And this development has attracted the attention of researchers. Currently, many experts are researching Bitcoin laundering to understand how it works. Interestingly, this practice involves professional facilitators.

Bitcoin exchanges and mixers

Money laundering activities that involve Bitcoin comprise two primary components. And these are Bitcoin exchanges and Bitcoin mixers. Bitcoin exchanges are platforms that enable individuals to exchange Bitcoin with fiat money. That means you can purchase Bitcoin using fiat money like US dollars. Also, you can sell Bitcoin to get fiat money on these platforms.

Essentially, to start trading in bitcoins you can go through this review. Currently, the internet is awash with such platforms. Therefore, start by researching the available crypto exchanges to engage in genuine and legal Bitcoin trading. On the other hand, Bitcoin mixers are platforms that focus on disassociating Bitcoin from its source. And this is a criminal activity. That’s because blockchain, the technology behind Bitcoin, stores the details of every transaction in a public ledger. And nobody can alter this public ledger or tamper with it. What’s more, every Bitcoin user can access this public ledger.

How cybercriminals use Bitcoin mixers

As hinted, blockchain is the technology behind Bitcoin. This technology provides a public ledger with details of all Bitcoin transactions. Essentially, a Bitcoin user can follow a transaction C, linked to transaction B, and eventually transaction A. However, Bitcoin addresses do not include the names of individual owners. And this enables criminals to operate with some anonymity levels. What’s more, only the owner with login details for a Bitcoin wallet can access the addresses.

In simple terms, even when authorities suspect that a transaction is related to criminal activity, they can have a difficult time trying to trace it to a particular entity or person. But, how do cybercriminals cash out the funds? Suppose a criminal uses a transaction to cash out the proceeds of criminal activity. In that case, authorities can link it back to the exchange related to illegal acts like ransom reception or the sale of illicit goods.

However, Bitcoin mixing platforms help criminals in hiding the crime proceeds’ origin. And this disassociates them from their criminal activities to ensure safe cashing out.

How Bitcoin mixers work

Typically, Bitcoin mixers provide their users with new Bitcoin addresses for depositing funds. That means a Bitcoin mixer pays Bitcoins from a reserve to the newly offered Bitcoin addresses. These platforms benefit from deducting a service fee. By applying some randomness to the payment amount and frequency, these platforms create a legitimacy guise.

Final thoughts

Bitcoin laundering is a crime. However, criminals are using Bitcoin mixers to launder their criminal proceeds. A cybercriminal can use a Bitcoin mixer to legitimize crime proceeds and utilize them elsewhere. On the other hand, crypto exchanges provide legit ways of purchasing and selling Bitcoin. Thus, Bitcoin traders and investors should research the platforms they use to buy and sell this virtual currency to ensure the safety and legitimacy of their activities.

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