Cryptocurrency Crime Tactics Quiz

Cryptocurrency exchanges that operate without proper licenses or regulations. These exchanges are often in high-risk jurisdictions and are susceptible to illicit activity.

Cryptocurrency exchanges located in jurisdictions with weak regulations or legal oversight, making it harder to track suspicious activity.

Individuals who are paid to move funds, often crypto, through multiple accounts to obscure the source.

Services that mix and anonymize cryptocurrency transactions, making it challenging to trace funds.

Decentralized finance protocols that allow anonymous transactions and lending of crypto assets, making it difficult to track the origins of funds.

Cryptocurrencies designed to enhance privacy by masking transaction details, making it hard to trace transfers.

A method used by criminals to move crypto assets between different blockchains to obscure their origin and avoid detection.

Decentralized exchanges (DEXs) provide an avenue for criminals to bypass compliance controls, similar to how non-compliant exchanges like SUEX, Chatex, or BTC-e operate.

The ability to bypass compliance controls offered by DEXs allows criminals to move funds more discreetly.

DEXs can enable criminals to evade tracking efforts by using non-compliant exchanges, such as SUEX, Chatex, or BTC-e.

Criminal activities involving DEXs are a growing concern, emphasizing the need for better regulation and oversight.

DEXs' decentralized nature, while beneficial for some, also poses challenges for law enforcement in tracing illicit funds.

BTC-e was a cryptocurrency exchange operating without proper licenses or regulations, known for facilitating illicit activities such as ransomware payments.

BTC-e was based in Russia and its founder, Alexander Vinnik, was arrested in Greece in 2017.

Estimates suggest that 95% of Bitcoin-denominated ransomware payments were cashed out using BTC-e.

BTC-e was involved in various crimes including computer hacking, fraud, identity theft, tax refund fraud schemes, public corruption, and drug trafficking.

BTC-e did not register as a Money Service Business (MSB) in the US, violating regulations and allowing US individuals to trade without proper oversight.

BTC-e collected minimal information from its customers, only requiring a username, password, and email address, making it easy for criminals to operate without being traced.

BTC-e offered services that enabled customers to conceal their transactions using mixers and offered access to privacy coins like Dash.

BTC-e used a complex web of corporate structures and shell companies to conceal its operations and ownership structure.

BTC-e falsely claimed to be located in both Bulgaria and Cyprus, while its managing company, Canton Business Corporation, was linked to Russia, further highlighting the exchange's opacity.

Over-the-counter (OTC) trading desks handle large, private transactions outside regulated exchanges. This lack of transparency makes them attractive to criminals looking to hide illicit funds.

OTC brokers can create a layered network of accounts, making it difficult to trace the origin of funds. This mimics legitimate business activity, masking illicit transactions.

SUEX and Chatex, both sanctioned by OFAC, facilitated ransomware payments by offering cryptocurrency-to-cash swaps, allowing criminals to disguise their proceeds.

Chinese OTC brokers, known for their involvement in large-scale money laundering, utilize exchange accounts in Asia to evade detection.

Mexican drug cartels are known to use Chinese crypto brokers to launder their illegal profits. This highlights the global reach of money laundering.

Crypto exchanges, even legitimate ones, can be used to make a transaction trail appear clean. This happens by transacting with untainted coins or cashing out with fiat currency.

Cryptocurrency exchanges rely on Know Your Customer (KYC) procedures for verification. Criminals employ fraudulent documents, such as fake IDs, to circumvent this process.

Cryptocurrency exchanges are online platforms, leaving them vulnerable to fraud. Criminals can easily create fake identities and exploit the system.

Criminals use money mules to open accounts in their own name or in the names of others. This allows them to move illicit funds through multiple accounts, making it difficult to track their origins.

A group of people, often with similar nationalities and addresses, who open accounts at a crypto exchange within a short period.

A common method of using money mules at a crypto exchange involves these individuals providing full identity details and supporting documentation, including passports and driver's licenses. They may even be asked to provide selfies.

The money mules might operate their accounts themselves and transfer funds to external sources like bank accounts, money transfer services, or other crypto exchanges.

Alternatively, the criminals can manipulate the mule accounts for their own purposes, transferring funds to external sources or using the accounts to launder money.

In a money muling scheme targeting students, job advertisements offering high pay for crypto transactions were posted on social media. The students were instructed to open accounts at crypto exchanges using their identity details.

The criminal organization then transferred fiat currency funds into the students' bank accounts. Students were instructed to transfer the funds to crypto exchanges and buy cryptoassets.

Students unknowingly acted as money mules, facilitating money laundering by transferring funds from fraudulent sources to crypto exchanges using their own accounts.

Cryptoasset exchanges can be used as a crucial step in money laundering schemes, where illicit funds are disguised by moving them through multiple accounts.

The use of students as money mules in the UK demonstrates how criminals exploit individuals for financial gain, often targeting vulnerable groups.

The money muling scheme highlights the potential for cryptoassets to be used for illicit activities like money laundering due to factors like anonymity and cross-border transfer capabilities.

When an attacker gains access to the private keys of a cryptocurrency validator, allowing them to control the associated funds.

A type of cryptocurrency exchange that allows users to trade directly without an intermediary, making it more difficult to trace transactions.

The process of disguising the origins of illegal funds by moving them through a complex web of transactions, often involving multiple accounts and intermediaries.

Frozen or blocked cryptocurrencies that have been flagged as suspicious.

An entity that verifies transactions on a blockchain, ensuring their validity and authenticity.

Countries and regions where money laundering and terrorist financing are prevalent, often due to instability or corruption.

Cryptocurrency exchanges that lack adequate anti-money laundering (AML) and counter-terrorism financing (CTF) regulations for cryptoassets, making them vulnerable to abuse.

These are exchanges located in countries with weak AML/CTF regulations specific to cryptocurrencies, even if they might be generally considered low-risk in other financial contexts.

These are entities, like individuals or groups, that are sanctioned by governments due to their involvement in illegal activities.

These are services that mix and anonymize digital assets, making it difficult to trace the source and destination of funds.

This refers to the exposure of a cryptocurrency exchange to transactions involving illicit actors, such as those associated with dark web markets, cybercrime, and fraud.

Identity details, such as passports and driver's licenses, are provided by money mules to open accounts at cryptocurrency exchanges.

Decentralized exchanges (DEXs) allow users to trade cryptocurrencies directly with each other, without the need for a central authority or intermediary.

DEXs lack a central administrator, making it difficult to track user accounts, identities, or activities.

DEXs' lack of central control makes them attractive to criminals who aim to launder illicit funds by hiding their transactions.

Even though DEXs are decentralized, blockchain technology allows for transparency in their transaction records.

Criminal activity involving DEXs is a growing concern due to the potential for anonymity and lack of oversight.

Cryptocurrency mixing services, like Tornado Cash, can be used alongside DEXs to further conceal the origins of funds.

Criminals can use DEXs to swap cryptocurrency, making it harder to trace funds through traditional methods.

Despite the challenges, blockchain analytics can be used to trace funds even through DEX transactions.

A criminal might obtain cryptocurrency through hacking an exchange, then move it to a DEX, swap for different tokens, and finally cash out at a legitimate exchange.

The decentralized nature of DEXs presents a challenge for law enforcement, but advancements in blockchain analytics can help combat criminal activities.

Decentralized Exchanges (DEXs) allow users to trade cryptocurrencies directly with each other, without the need for a central authority or intermediary. These platforms lack a central administrator, which makes it difficult to track user accounts and their activities.

Unlike centralized exchanges, which control user funds directly, DEXs function mainly through smart contracts. This means that users can trade directly with each other, with the exchange itself acting as an intermediary for order matching.