Crypto Crime Trends Evolving as Users Wise Up: Exchange Hacks, Darknet and Money Laundering

Chainalysis examines the trends of exchange hacks by tracing the movements of hacked funds from exchanges to their exit points, providing new data on the patterns of transaction activity in the weeks and months after a hack has taken place.

These efforts are elaborate, as hackers will move funds up to 5,000 times.

According to Chainalysis, the group will sit on funds for six to 18 months before quickly cashing out 50 percent of funds within days on a single exchange.

As noted, exchanges and law enforcement agencies have not had the necessary means to track hacked funds up until recently.

The research company worked to identify stolen funds that had been moved to another exchange, and once these deposits were verified, the exchange was able to work with law enforcement agencies to address the problem.

Decoding hacks is identified as the first step to actively combating this type of crime - allowing funds to then be tracked and recovered.

As criminals come up with innovative ways to steal funds from crypto users around the world, they still face a problem when it comes to laundering this money.

Interestingly enough, money laundering using cryptocurrencies provides a unique opportunity to trace funds, given that transaction data is completely transparent in fully decentralized cryptocurrencies.

These various money-laundering services in the crypto space take funds from users, mix them together and output the funds back to users, creating an intricate web of transactions that makes the origin of the funds difficult to identify.

This is an evolution in methodology - given that in 2016 and 2017, crypto money launderers typically kept all their funds in one pool.