According to the United Nations, between USD 800 billion and USD 2 trillion are being laundered every year across the globe, representing 2-5 percent of the global gross domestic product. Out of this, more than 90% goes undetected. The exact volume of crypto laundering is yet to be established. However, there are some indicative statistics on the Internet.
A Cipher Trace report says that crypto thefts, hacks, and frauds totalled USD 1.36 billion in the first five months of 2020, compared to 2019’s USD 4.5 billion.
According to the Chainalysis report, criminals laundered USD 2.8 billion in 2019 using crypto exchanges, compared to USD 1 billion in 2018.
Reportedly as of 2019, total bitcoin spending on the dark web was USD 829 million, representing 0.5 percent of all bitcoin transactions.
Earlier this year a complaint was lodged at the IFSO unit of the Special Cell in New Delhi by a woman alleging that she was being abused and threatened by some unknown persons who were sending her morphed and vulgar photographs to her family, friends and relatives through social media.
The complainant had taken a loan from one Loan App, namely Cash Advance (Danakredit), she repaid the same in time. But after repaying the said amount she started getting threat calls and messages on WhatsApp from Cash Advance employees. It was further observed by the complainant that the alleged scamsters were using the profile picture of a highly ‘senior police officer’.
During the course of the investigations money trails of alleged transactions were established and it was found that the money was being transferred in a current account which had been opened in the name of Balaji Technology. Further it was found that the name of Balaji technology was used at a shop of motorcycle repair. The proprietor of the account was found in the name of Rohit Kumar, a resident of Rajeev Nagar, Delhi. It was further found that in the alleged account approximately Rs 8.45 crore were credited in just 15 days and the same was transferred to other accounts simultaneously.
During the interrogation of all the accused, it was found that if a needed person wanted to take some loan through the Apps available online, he had to download the said App first. At the time of downloading, the App asks for permission to capture, contact list, photo gallery and other personal data of the phone of the loan seeker.
As soon as the permission was granted by the loan seeker, all their data got transferred to the Chinese servers. Once this process was completed, the fraudsters immediately got the loan amount transferred in the account of the loan seeker. One team used to track such loan seekers and another would call the loan seekers and their associates like relative friends, etc., through different mobile numbers to refund the money from the loan seeker. Even after refunding of the money, the alleged accused used to extort more money from the loan seeker and also started sharing the morphed vulgar photos of the loan seeker to his family, relatives and friends to pressurise the victims to pay more money. Money paid by the victims were channelised through cryptocurrency to China links.
In another incident last year, Pawan Kumar Pandey, accused of running a shadow company to transfer the cheated money to his alleged “handlers in China”, was arrested from Noida in Gautam Buddh Nagar district of Uttar Pradesh last year. 19 laptops, 592 SIM cards, 5 mobile phones, 4 ATM cards and one passport were also recovered from him.
Uttarakhand police had said that the racket came to light following a complaint by two Haridwar residents: Rohit Kumar and Rahul Kumar Goyal.
“The complainants claimed that one of their friends told them about a mobile app on Google Play Store named Power Bank, which doubled returns on investment within 15 days. Believing him, they downloaded the app and deposited ₹91,200 and ₹73000,” revealed Uttarakhand Police.
A probe was initiated by the special task force which found that the mobile app in question was available on Google Play Store between February 2021 and May 12, 2021, during which, it was downloaded by at least 50 lakh people. It also found that the money deposited through the app was then transferred to bank accounts of the arrested accused through payment gateways. Post the cyber forensic probe it was learned that the app was linked to China, where Pandey’s handlers are sitting. They used to encash the crypto currencies into their local currency to end the chain of money laundering, which started with duping Indians through the app.
Cryptocurrency is a digital or virtual currency that is protected by encryption. Cryptocurrencies are distinguished by the fact that they are not issued by any central authority, making them potentially resistant to government intervention or manipulation. The biggest criticism Cryptocurrencies face is their use for illegal activities.
Technological advancements have given criminals faster and safer options to wash their ill-gotten money. There is no doubt that cryptocurrencies are a very useful technological innovation that helps individuals and institutions access financial products and services in a faster and more cost-effective manner. However, their rise as alternative value transfer and investment tools raises money laundering concerns as well.
Cryptocurrencies are rapidly gaining popularity, but not everyone is on board, as many governments have outlawed dealing and trading in these digital tokens. While there are apparently over 5,000 known cryptocurrencies in the world today, analysts and experts are still anticipating a rapid rise in the value of Bitcoin, the world’s oldest and most valuable cryptocurrency. However, while some nations, like India, are going slow on their crypto markets, others, such as Russia, Morocco, Egypt and Bangladesh, are tightening down. Recently, China’s central bank has announced that all transactions of cryptocurrencies are illegal in the country.
The danger is cryptocurrencies is a simple fact that cryptocurrencies are unregulated. They are currently unregulated by both governments and central banks. However, recently they have started to attract more attention.