DOJ says use of privacy coins is 'indicative of possible criminal conduct'October 8, 2020
A new report from the U.S. Department of Justice alleges that crypto traders dealing with coins like Monero, Dash, and Zcash are engaging in “high-risk activities.”
According to the report by the U.S. Attorney General’s Cyber Digital Task Force called Cryptocurrency: An Enforcement Framework released on Oct. 8, anonymity enhanced cryptocurrencies (AECs) can undermine existing anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations put in place by businesses dealing in fiat. The task force cited coins including Monero (XMR), Dash (DASH), and Zcash (ZEC).
“The Department considers the use of AECs to be a high-risk activity that is indicative of possible criminal conduct,” the report stated. “AECs are often exchanged for other virtual assets like Bitcoin, which may indicate a cross-virtual-asset layering technique for users attempting to conceal criminal behavior.”
According to the report, privacy coin holders can obfuscate the origin of their tokens using mixers, tumblers, and chain hopping, undermining AML and CFT.
Chain hopping, which the DOJ claims is “frequently used by individuals who are laundering proceeds of virtual currency thefts,” involves swapping one’s crypto holdings for assets which are native to a different blockchain. Mixers and tumblers make it difficult for investigators to trace funds by mixing crypto holdings from multiple traders before they’re sent to the appropriate wallet.
“Operators of these services can be criminally liable for money laundering because these mixers and tumblers are designed specifically to ‘conceal or disguise the nature, the location, the source, the ownership, or the control’ of a financial transaction.”
This is a developing story and will be updated.
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