Anti Money Laundering and Crypto Scandals

Money Laundering

While the cryptocurrency rage remains unabated, con-artists spend no time taking the benefit of this circumstance. As stated by the research, cryptocurrency scam has two-fold in January. In the statements of the previous months, it is encountered that these numbers have grown. In the studies made for the cryptocurrency rage, it is declared that the aim to earn cash easily and get rich instantly leaves current investors exposed to criminals. 


As stated by the study from the national scam reports service Action Scam, bitcoin scam reports have risen by 58% in the last years to 5,861. In February 2021, cryptocurrency persisted to hit record highs, more than doubling from February 2020 to 720. Furthermore, it was stated that £ 15.3 million was acquired through bitcoin fraud in February alone. Listed below are some cryptocurrency scams that have left their imprint on the AML sector. 

1) Plus Token Ponzi Scheme 


Plus Token created $ 3.9 million in 2020, incorporating 65% of the volume of bitcoin crimes. It is a cryptocurrency Ponzi scheme disguised as a high-return loan plan. The process concluded as of July 2020. Plus Token officials rejected the scheme, eliminating about $4 billion in cryptocurrency. This Ponzi plan fraud made bitcoin prices drop dramatically in 2020. 


Plus Token had a great audience, particularly in China and Korea. Investors unknown to cryptocurrencies usually refer to Plus Token. Since Plus Token gives high rewards that helped its victims to “invest”. The program gives between 11 per cent and 19 per cent ROI per month. 

2) KuCoin Hacking 


The KuCoin hacking occurred on September 27. The cyber-hacked cryptocurrency provider KuCoin has safely stored its cryptocurrency from the platform and in hot wallets rather than digital cold wallets. Therefore, the company staff found that crypto from hot wallets, involving Bitcoin, Ethereum and ERC-30 tokens, was discharged after finding some main withdrawals.        


It is examined that at least 160 million dollars of crypto cash were stolen in this cyber scam. The business declared in its records that it does not allow the number lost. Therefore, KuCoin Chief Executive Officer and co-founder Johnny Lyu declared 85% of stolen crypto funds were retrieved. 

3) Defi Protocols 


Defi Protocols amounted to 98.97% of the scam volume in the second half of 2020. Defi protocols included almost half of all cryptocurrency attacks for 2020. As regulatory authorities emphasize how the crypto space should operate, the latest regulations and regulatory laws are developing. In the United States, FinCEN has imposed two main law changes in regulatory laws that the banking sector and VASPs encounter when handling specific digital currency payments. 


Users strive to gain by depositing cryptocurrencies into a saving account and related networks through Defi websites. Therefore, if the deposited crypto remains locked in the system, it creates periodic transactions well above the amounts given by the banking sector. 

4) Thodex Scandal


Turkey presently encountered a Thodex scam. The previous week, the crypto-exchange website, Thodex, declared on the platform that the exchange would be closed for quite some time to give better service to its clients. 


Therefore, end-users who couldn’t authorize crypto accounts and withdraw their cash were suspected of frauds. It was recognized that Thodex Chief Executive Officer Ozer got $ 3 billion in funding from 392,000 investors and fled overseas. Thousands of Turkish customer have filed fraudulent complaint since they are innocents of the exit strategy. Therefore, it was discovered that the stolen amount was “irreversible” in the legitimate procedure.

Cryptocurrency Regulations 


A financial action task force has announced its 12-month Review of the Revised Financial Action Task Force of the digital assets and VASPs as of July. This review was generated to combat the possible risk of money laundering that future VASPs could impose. Furthermore, under the Financial Action Task Force Travel Law, known as the Travel Law, the banking sector and some monetary institutions dealing with cryptocurrency funds are required to reveal and send particular client information between the parties. 


With the enactment of these laws by the initial period of 2021, the endowment of the critical latest cryptocurrency compliance laws, and the rush of the banking sector and virtual asset service providers to file crypto CTRs and Ripple have shown the risk of financing terrorism activities through cryptocurrency. 

Digital asset provider sectors need to use a risk-based anti-money laundering and countering terrorist financing software against financing terrorism risks. Anti-money laundering and countering the financing of a terrorism compliance system that strives to minimize the money laundering uncertainties of companies. It assists businesses to adopt a risk-based strategy and minimizes workload with the end-to-end solutions it gives.

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