Types of frauds in the cryptocurrency industry are getting stronger for current regulators and anti-money laundering enforcement to deal with. The latest attack is known as crypto dusting, which involves the money launderers sending fractions of cryptocurrency to several wallets to mask illegal activities on the coins. The continued practice of “crypto dusting” has been named as one of the hardest ways to track culprits breaking AML rules by Dave Jevans, CEO of CipherTrace and chairman of the Anti-Phishing Working Group.
The Crypto Dusting Technique
Crypto dusting involves sending anonymous Bitcoin to several accounts randomly hence blocking off any anti-money laundering algorithms from detecting any foul play. BestMixer.io is used to shuffle and anonymize the Bitcoins before sending them out. BTC is then ‘gifted’ to thousands of wallets and a message is sent from the BestMixer team welcoming the unsuspecting receivers.
While tainting thousands of coins on BestMixer.io might raise some questions on legitimacy, the process to distribute the coins makes it impossible for current algorithms to detect any money laundering. According to DarkReading that published an article on crypto dusting,
“They [Money launderers] are just putting it in your crypto wallet. When they do a run, they look at the last 75,000 addresses and send to them. When you open up your wallet, it’s there.”
Users receiving the BTC are unaware of the harmful gift received and the effects of the ‘blessing’ in disguise. First, exchanges that have implemented tough AML regulations will place your account under suspicion monitor your transactions and can connect you to illegal activities. Not a blessing after all. Jevans said,
“You have engaged in a transaction with a known money-laundering service, so it will raise the risk on your accounts for any exchange that has implemented anti-money laundering protocols.”
Future Mechanisms To Beat Crypto Dusting
In as much as crypto dusting beats the current AML algorithms by tainting the coins by linking thousands of wallets, new algorithms will be able to notice these activities according to Jevans. The CEO further said that those users that are “gifted” with these type of coins, should refrain from using the coins. The use of such coins if detected will ruin your reputation and privacy on the exchange and can link you to conspiring to commit illegal activities.
“On the consumer side, when you receive money like this — a small amount from an unknown source — the best thing to do is go in and block it from being sent,”