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Dirty Bitcoins: How to Conduct an Anti-Money Laundering Check on Your Crypto – BeInCrypto

Some researchers say that over 40% of all bitcoin (BTC) transactions are linked to crime . Owning “dirty” coins can get you in serious trouble, even if you didn’t participate in any illegal activity. Is this something you personally should be worried about, and if so, how can you conduct an anti-money laundering (AML) check on your crypto?Sponsored


What is a dirty bitcoin?

A coin is considered “ dirty ” if it ’ second been involved in any illegitimate action such as :Sponsored


  1. Crypto crimes like wallet or exchange hacks;
  2. Money laundering, which includes criminals trying to hide the proceeds of their illegal activities by converting them into crypto (spoiler: it doesn’t work);
  3. Scams such as fraudulent schemes and projects;
  4. Darknet marketplaces, or hidden sites where users buy and sell drugs, stolen credit card details, and other illegal goods for crypto.

Here’s what a darknet marketplace looks like. Source: AMLBot Dirty coins can be identified through AML checks. note that a mint can be considered dirty even if it doesn ’ deoxythymidine monophosphate come directly from an illegal or deceitful source. For case, BTC coming from unregistered exchanges or shuffle services will be flagged by any established crypto AML program .

What are the risks?

The bad news program is that even if you have no idea that some of your coins are dirty, you can still suffer some losses. hera are some potential consequences of not running an AML check :

  1. Not being able to sell your coins at current market prices. Reputable exchanges won’t convert suspicious coins into USD and other fiat currency. To sell dirty tokens, you’ll have to use a peer-to-peer (P2P) platform or a minor exchanger that will charge a higher commission. Sometimes dirty bitcoins are even sold at a discount of 10% to 20%, or more.
  1. Getting blocked on an exchange. Most major exchanges – and all regulated ones – use special tracing software to detect dirty crypto. Once you try to deposit suspicious coins, the exchange will stop you from making any new transactions until you can prove the origins of the crypto. This is a real problem that is often discussed on Reddit:

A screenshot of a Reddit post. Source: AMLBot

  1. Losing your crypto. If you can’t provide any supporting documentation in relation to your source of funds, the exchange will not only block the account permanently, but also won’t let you withdraw any of the coins on your balance. Say goodbye to your satoshis!
  1. Dealing with law enforcement. Exchanges can report any evidence of a crime to the financial police that will probably want to question you. Even if you can prove that you didn’t commit whichever crime your bitcoins were involved in, you’ll still lose the coins because normally proceeds of crime are forfeited. 
  1. Serious legal trouble. In the worst-case scenario, you may be prosecuted as an accomplice or accessory to a financial crime.

How does AML software detect dirty bitcoins?

Anonymity and privacy are the two advantages of crypto that people normally get excited about. indeed, bitcoin is anonymous in the common sense that you don ’ t have to enter your personal information when you create a wallet .
however, bitcoin is besides highly traceable – every bitcoin transaction leaves a digital trail, which makes it potential to follow. You can easily trace the majority of coins, except for the privacy-oriented ones like Monero ( XMR ), although flush those aren ’ thyroxine immune .
In case you ’ re wondering whether you can check the origin of the receive coins on your own, without using any dedicated AML software, the answer is no. You can conduct some preliminary inquiry using a blockchain internet explorer like or Etherscan to see the list of all the transactions associated with the wallet address that sent you the coins .
Keep in mind that these tools won ’ deoxythymidine monophosphate reveal the person behind the addresses. besides, criminals normally use dozens or hundreds of dummy wallets to cover up their tracks, so you ’ ll need considerable processing power and special algorithm to track them down. In fact, blockchain analysis software is a boom diligence !

Latest crime trends involving bitcoin

Some researchers, such as Foley et al., believe that 46 % of all transactions with bitcoin are directly or indirectly linked to some illegitimate bodily process. however, judging by more recent datum, the site may not be equally grim as it seems .
Crypto crime volumes seem to be decreasing. According to CypherTrace, the total value of crypto crimes in the inaugural ten-spot months of 2020 amounted to $ 1.8 billion, as opposed to $ 4.5 billion, in 2019. This includes hacks, larceny, and darknet transactions. For exemplify, in September, 2020, hackers stole $ 150 million from KuCoin alone. A large share of these funds likely went to minor unregulated exchanges, where they were bought by unsuspecting users .
Darknet marketplace activeness is intensifying. A late Chainalysis report suggests that about $ 790 million in crypto was sent to and from darknet marketplaces, in 2019 .
only a few among the richest bitcoin addresses hold over 1 % in cheating or fishy coins. We ’ ve conducted a study based on the data from AMLBot, an open crypto tracing software. rather of trying to go through thousands of random addresses, we looked at the 100 richest BTC addresses, including those belonging to exchanges .
A fragment from the AMLBot research report. Source: AMLBot interestingly, AMLBot flagged only six of the addresses as containing any BTC that came from the darknet. 15 addresses held some coins that came from mixers or scam projects. In total, the software ranked 47 out of the 100 as low-risk, 52 as medium hazard, and equitable one a high gamble .
That unmarried very leery cover is actually a super-whale with over $ 2 billion in bitcoins .
We concluded that, while quite common, illegal natural process involving crypto international relations and security network ’ thyroxine something you should lose rest over. But of course, this doesn ’ thymine bastardly you shouldn ’ triiodothyronine exercise caution .

How you can protect yourself

There are several effective ways to avoid legal and early risks associated with dirty and fishy crypto. Those are :

  1. Avoid using bitcoin mixers, cleaners, and similar services. While they do conceal the origin of the coins, any established tracing software will mark such transactions as coming from a mixer, which is a red flag for many exchanges. 
  2. Channel all incoming crypto funds into two separate wallets: “clean” and “potentially risky.” The first should contain coins coming from reliable business partners, regulated exchanges, mining pools, and services that have Know-Your-Customer (KYC) checks. Use the “clean” wallet only to send money to large trading platforms. By contrast, all the coins you receive from strangers, unofficial over-the-counter services, gambling sites, small exchanges,and others, should go into the “potentially risky” wallet.
  3. Use open crypto tracing software or a wallet that lets you buy bitcoin with a card and do an AML check at the same time. Such services are usually premium and charge either on a per-month or per-check basis. They deploy advanced algorithms similar to those utilized by the police and thus, can detect all or almost all suspicious coins.

Authorities take action to fight dirty crypto

With some assistant from blockchain analysts and knock-down tracking software, the patrol regularly disassemble money-laundering rings and other crypto criminals. For exercise, in 2019, US police enforcement took down the world ’ s largest child pornography locate, at the time, by tracking some BTC payments down to its founder .
apart from transaction checks, many countries use ever more advanced AML and KYC laws that oblige crypto platforms to verify their users ’ identity and report card such information to the authorities. The best exercise is the Fifth Anti-Money Laundering Directive ( 5AMLD ), which came into effect in the European Union in January 2020.

A combination of blockchain trace software and AML legislation is making the crypto landscape safe for regular users. If you only use top exchanges and regulated services to buy crypto with a deposit batting order, your risk of stumbling upon dirty BTC is pretty moo. hush, it ’ s not a bad idea to check your crypto holding for “ cleanliness : ” who knows what you ’ ll find there ?
note : The views expressed here are those of the generator ’ sulfur and do not necessarily represent or reflect the views of BeInCrypto.


All the information contained on our web site is published in good faith and for general information purposes only. Any action the lector takes upon the information found on our web site is strictly at their own risk.

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Category : Economy

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